This post with exclusive charts and content is just for readers of our emailed newsletter. This week we focus on bullish Elliott wave scenarios for the NYSE Composite Index and the NASDAQ.
We’re also trying something new this spring. Subscribers to our Daily Analysis often ask about what’s being discussed in the Intraday Service chat. If you’d like to find out whether the Intraday Service suits your trading style, see the final section of this email for an opportunity to try it with no extra cost.
Upward targets for the NYSE Composite
Some readers were skeptical when we suggested in December and again in early January that stock indices might need to make another high this year before putting in a real top. It’s still not a certainty, but the prospects for a new high look much better now.
The channel we showed for the New York Composite Index (symbol NYA) in our December post turned out to be very important. A test of the lower channel boundary in January produced an extraordinarily strong bounce that might be the first part of an upward impulse.
Soon after NYA tested its lower channel boundary, we also wrote about the prospects for moves higher in the iShares Russell 2000 ETF and the nicely formed corrective pattern in the Dow Jones Industrial Average.
With all the indices, the climb from December’s low has been impressive. The chart included here shows some areas to watch in NYA for an upward impulsive move to find resistance and eventually to put in what we expect to be a fairly durable high.
As we noted in the earlier posts, we view the December low as an Elliott wave (iv) of a five-wave upward sequence from early 2016. The bounce from December represents part of wave (v) of the sequence.
It is not yet clear where the count of sub-waves stands inside upward wave (v). However it is still possible to identify various Fibonacci levels that can act as stepping stones for trades.
If resistance at 13123 holds on first test, then a small downward retrace could take the index to 12464 or 12174 before the next upward leg begins.
Similarly, tests of resistance at 13569, 13984, and 14441 could produce either consolidations or reversals. Note also how those resistance areas fit with the harmonics of the upward-sloping channel.
In terms of timing, two prominent cycles in the S&P 500 both have their inflections in middle/late July 2019.
The downward breakout trade we highlighted also worked very well.
Even though we wrote about the possibility of a NYA bounce in mid-December, we also noted that a break of support near the center of the channel and the 1×1 measurement of the w-x-y pattern at 11680 would make for a nice short trade. Soon after the post was published, NYA broke beneath the supports and moved rapidly to test the lower channel boundary – a move of more than 900 points.
Zooming in on NASDAQ
NASDAQ 100 futures appear to be in approximately the same place as NYA with respect to an upward impulse from the start of 2019. Right now price seems to be trying to finish sub-wave ‘iii’ of that impulse. (It is notoriously difficult to put an Elliott wave count on a third wave while the wave is still developing.)
Looking at a daily futures chart, there are important resistance areas at 7688 and 7800. The lower one was tested yesterday (Wednesday).
If the first resistance holds in NDX and NQ, then some Fibonacci-based areas to watch for a relatively quick wave ‘iv’ target include 7473, 7277 and perhaps 7076. The specific scenario we have drawn on the NQ chart here shows a triangular fourth wave, but that isn’t the only possible form.
Two notable upward target areas for the next impulse sit at 8061 and 8262. If price is in that region at the same time that the other indices are testing their upward targets, it could signal the formation of a lasting top.
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Good fortune to you in your trading!
— Tom and Kurt at Trading On The Mark