We continue to follow two bearish structures of a large pullback off the top made in November 2021:
(1) the Very Bearish Scenario:
The Very Bearish scenario considers the move down off the all time high made in Nov’21 as a simple (A)-(B)-(C) down corrective structure where wave (C) is supposed to have an impulsive five wave down internal structure:
Note that NQ popped on Friday afternoon of an important support:
NQ stopped at 10,733, a double bottom that stopped a pullback in Sep 2021.
Once bears push under that level they will get into an airpocket that would let them quickly drive NQ under 10,000. Because the next macro support is 9,800, the pre-pandemic high made in Feb 2020.
(1.1) The very Bearish Count: micro path:
Below is a Very Bearish path down to an obvious Macro Target 1 = 76.4% extension of wave (A) down = 9,765 and Macro Target 2 = 100% extension of wave (A) down = 8,525.
(2) Scenario 2: The Second Complex “3-3-3” structure does not promise that mauch drama as has been widely expected by Elliott Wave community:
Both scenarios, the Very Bearish “3-3-5” (the scenario 1) and The Moderately Bearish “3-3-3” structure (the scenario 2):
- are composed of three waves, (A) down, (B) up, (C) down waves, and
- argue for continuation of decline down to 8,500- 7,000 in 2023.
The main difference between thos two wave counts is a micro structure of the second leg down of wave (C).
The first Very Bearish “3-3-5” scenario argues for a very strong climatic drop in wave (C) down, a straight line move down to 8,500-8,000.
The second moderate and complex “3-3-3” fractal argues for similar targets but it suggests a much more complex way leading there:
Under that complex “3-3-3” structure bears may push NQ down to 9,800 in wave (v) of A of (Y) down:
Such a drop to 9,800 (re-testing from above the pre-pandemic high made in Feb 2020) would complete a large wave A down that started in mid August 22 and set the stage for a large pullback in wave B up that can to by the year end (the Santa’s Rally).
(3) Scenario 3: An Alternative Bullish Count:
Unfortunately, we have to discuss another one, an alternative bullish count that does not allow bears to push down to 9,800. At this point that count has to be considered as a low probability alternative count because NQ has been the weakest index and it is located under ALL moving averages (8 EMA, 21 EMA, 50 SMA, 200 SMA).
To invalidate that bullish count bears need to break under 10,484, the starting point of a micro wave (i) up.
As always, when we deal with any bullish (i) up, (ii) down long setup we HAVE TO be mentally and financially prepared to go short on breakdown under the starting point of wave (i ) up. Such a decline not only would invalidate the bullish (i) up, (ii) down count, but itself would be become an attractive short setup.
Read my blog post explaining how invalidation of (i) up, (ii) down long setup should be considered as an attractive short setup!
The Scenario 2, the Complex “3-3-3” count remains my favorite one because its the most tricky and least expected one.
We can see a stable time cycle that connects high and lows this year.
That cycle argues that we can make an important low (or High) on Nov 16-18.