Nasdaq 100 - S/H/S top building

Nasdaq 100 - S/H/S top building

The Nasdaq 100 index topped at 4,781 in March 2000 and dived some 90% to a low of 795 ultimo September 2002 before staging a new large rally that most like topped 4,739 in late November 2015 and a major S/H/S top seems to be building. This top formation will not be complete before the neckline support near 3,800 is broken, but when this neckline support is broken the downside potential is once again huge. 

From an Elliott wave perspective a huge flat correction has been building since the March 2000 high. Wave [A] was the decline from 4,781 to 795 and was followed by wave [B] to the November 2015 high. Wave [B] peaked just below the 2000 high and is made up of three waves, where wave W moved from the 795 low to 2,239 wave and was followed by an X wave down to 1,035 in November 2008 from where wave Y took over for the rally to 4,739. Wave Y became an extended wave and extended by close to 261.8% the length of wave W. 

With wave Y in place, I'm currently looking for a break below support at 4,277 as the first strong indication that the right shoulder of the S/H/S topped at 4,591 and a test of the neckline support is developing. A break below the neckline support will call for a decline to just below the low of wave [A] at 795.


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