Drop Probably Over (2/24/2021)

As shown on my Elliott Wave count above, it looks like the NDX has just completed Minor Wave IV (magenta). The recent drop was 8.1%, relatively close in magnitude to the 10.2% drop during Oct 12 – Nov 2, which I labelled Minor II. This, combined with the close proximity of the Feb 23 low to the Minute IV low on Jan 29, leads me to think that we have indeed completed Minor IV and are now headed to new highs to complete Intermediate I.

Given how choppy the rally from the September low has been, I am thinking that the NDX will not get far above the Feb 16 highs before we go into the Intermediate II correction, which will likely be greater than 10%, but less than the 14% drop in September.

When we go into the Intermediate II correction, I expect a dramatic surge in bearish sentiment, and the media will likely find something to go hysterical over. But the mania should ultimately set the stage for a very powerful rally lasting through the end of 2021.

Update (2/10/2021)

The rally from the Jan 29 low up to new highs has improved the intermediate term outlook for the NASDAQ-100, and likely the U.S. stock market overall. From an Elliott Wave standpoint, while I cannot absolutely rule out the possibility that we are in a B-wave up from the Sep 21 low, I find that unlikely now given that this would be quite an unusually long B-wave.

It makes most sense to say that Primary Wave III of the bull market started at the Sep 21 low. The choppy activity in December had previously kept me from being confident in this projection, but since we now have a clear five-wave sequence up from the Nov 2 low, the index is finally showing signs of an Elliott rhythm again.

As shown on the chart above, I think we are currently in a rally to complete Minor Wave III (magenta). I cannot predict how high this rally will go, but if the rally from Jan 29 equals the rally from Nov 2 – Nov 9, the targets would be 14,156 on a point basis and 14,381 on a percentage basis.

Afterwards, we will see Minor Wave IV (probably a 5-10% drop), then the Minor V rally. After that, there will likely be a drop bigger than 10% but less than the 14% drop in September.

I am using the NASDAQ-100 (NDX) for my Elliott Wave projections because, unlike the Dow Industrials and S&P 500, the NDX has a clear five-wave pattern from the March 2020 low to the September 2020 top.

While the Dow and S&P are not following Elliott Wave very well, I expect that they will continue to trend higher as long as the NDX remains in a bull market Elliott pattern.