NASDAQ Composite High Risk Alert

This is a Trendy Stock Charts NASDAQ Composite High Risk Alert! All gains from the previous follow-through day have been erased and a possible drastic move to the downside is setting up. We will get to the details in 3 different charts below.

Consider this a follow-up to this previous article I wrote:

“10/28/2018 – The Uptrend Is Over For The NASDAQ Composite”

Be certain to check out the summary for key price levels that need to be monitored in the next couple of trading days!

This first chart for the NASDAQ Composite is a 10 year weekly candlestick chart. I chose a 10 year chart because it encompasses the entire uptrend since it began in March 2009. I chose a weekly candlestick chart because it provides a little more detail than a monthly candlestick chart. This extra detail is needed to help properly identify waves.

Analyzing the NASDAQ Composite’s Uptrend Beginning March 2009 Using Elliott Wave Analysis

The MACD Histogram chart indicator, one of my favorite indicators when I analyze Elliott Waves, shows the highs amount of selling momentum during Octobers pullback. You will see on the next chart, a 5 year monthly candlestick chart, that the MACD Histogram reflects increased selling momentum.

This is a bear market right now by definition. The NASDAQ has pulled back more than 15% from its highs. So what does that mean when you combine the MACD readings on the weekly and monthly charts? Keep reading on to find out[s2If !current_user_can(access_s2member_level1)]……

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I calculate the probable reversal areas for the current downtrend using a combination of Elliott Wave analysis and a Fibonacci Extension Tool.

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5 Year Monthly Chart

There are 2 major points of emphasis on this next 5 year monthly candlestick chart.

The MACD Histogram on a long-term basis is showing selling momentum that is increasing
The main supporting trendline for the last leg of the uptrend was broken with October’s pullback

A Monthly Candlestick Chart Provides for a Long-Term Outlook Since the Trading Tools Analyze Month By Month

Will the index make a higher high or a lower low when compared to November?

Current Downtrend

This last chart is a 2 year daily candlestick chart. I want to look at the current downtrend in more detail and a daily chart definitely provides even more detail to further breakdown and confirm the wave count. But before analyzing the waves, take a look at the numerous gap-ups that are still open (purple channels. I even think I missed marking one around the 6600 price level.

Using a Fibonacci Extension Tool to Calculate Support Areas for the Current Downtrend

The 2 target areas for the current downtrend are the 100% & 161.8% Target Lines. However Elliott Wave analysis suggests the 5,200 price level. That suggests the 161.8% Target Line is the target when combined with Elliott Wave analysis. Reaching the 161.8% Target Line will be by means of a Bearish Impulse wave pattern. The next chart illustrates how I think the current wave count is unfolding.

Wave Count

This is a 6 month daily candlestick chart. I zoomed in to just focus on the downtrend and the wave count of the downtrend.

Breaking Down the Current Bearish Impulse Wave Pattern

Waves 1-5 that developed during the October pullback represent wave 1 on a larger scale Bearish Impulse wave pattern. If that is indeed the case, then it is probable that the NASDAQ is about to enter typically the worst part of the pattern – Wave 3.

On a Bullish Impulse wave pattern, wave 3 is the best wave for the uptrend. Well, the opposite is true for the Bearish Impulse wave pattern – wave 3 is typically the worst part of the downtrend with little to no relief in sight as prices decline throughout the market.

Ticker – Point & Figure

What do the Point & Figure charts say about the NASDAQ?

High/Low P&F Chart – $8699 Bullish Price Objective

Closing P&F Chart – $6301 Bearish Price Objective

The bearish price objective certainly supports another move to the downside as I anticipate. Maybe the 6,301 price level is where wave 3 of the current pullback will end before a slight rebound and then continue its March towards the 5,200 level according to the Elliott Wave Analysis.

NASDAQ Composite High Risk Alert – Summary

The short-term price level to watch is the 6,830.78 level, the recent low of the pullback. A break below that price level before rising above 7,572.93 is confirmation that wave 3 to the downside is in full force and effect.

If the index can rally before breaking below 6,830.78, it still could produce a Santa Claus rally. Any break above the 7,572.93 price level is confirmation will prove my move to the 5,200 area wrong based on my Elliott wave labeling.

Be careful and hopefully you have taken some off the table by now…

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