5th wave GAP down in $COMPQ $NDX $TQQQ tomorrow = big reversal? Aug 1, 2024
### NASDAQ Elliott Wave Update — August 1, 2024
Today, the NASDAQ experienced a significant decline, effectively erasing the gains it made following the Federal Reserve’s announcement. This drop is indicative of a fifth wave slide in the ongoing corrective pattern. Despite the grim performance, this movement fits within the framework of the Elliott Wave theory and suggests a potential bottom in the near term.
#### Understanding the Current Wave Pattern
1. **Fourth Wave Rally and Reversal**: The rally triggered by the Fed news was a classic fourth wave retracement. It precisely hit the 38.2% retracement level, reaching up to 17,800. This level acted as a resistance, and the subsequent drop aligns with the expected fifth wave decline.
2. **Fifth Wave Targets**: The fifth wave is now in full motion, with a maximum downside target of 16,750–16,800. This target is calculated based on the Elliott Wave principle, where the fifth wave is often 61.8% of the combined length of waves one and three. Given the current momentum, this target range could be reached by tomorrow morning.
#### Technical Indicators and Market Sentiment
1. **VIX Levels**: The VIX, a measure of market volatility, is expected to hit 21–22 in the pre-market session before the jobs report. Elevated VIX levels typically correlate with heightened market fear and uncertainty. A spike in the VIX to these levels would suggest that the market is experiencing significant stress, possibly indicating a capitulation phase.
2. **Potential for a Reversal**: Despite the bleak picture, the completion of the fifth wave could set the stage for a significant reversal. If the NASDAQ gaps down to the 16,750 level in the pre-market and the jobs report provides a positive surprise, we could see a sharp rally. This scenario would mark the end of the corrective phase and the beginning of a new upward trend.
#### Short-Term Outlook
1. **Immediate Support and Resistance**: The critical support level to watch is 16,750. If the market reaches this level and finds support, it would confirm the completion of the fifth wave. On the upside, a move back towards 17,800 would be a bullish signal, indicating that the correction is over.
2. **Market Reactions to Economic Data**: The upcoming jobs report will play a crucial role in shaping the market’s direction. A strong jobs number could alleviate some of the economic concerns and trigger a rally, while a disappointing report might prolong the market’s decline.
#### Strategic Considerations
1. **Risk Management**: Traders should remain cautious and employ strict risk management strategies in this volatile environment. The potential for significant swings in either direction necessitates a disciplined approach to trading.
2. **Long-Term Perspective**: While the short-term outlook appears challenging, the completion of the fifth wave down offers a potential buying opportunity for long-term investors. Historically, the end of a corrective phase often leads to robust rallies, providing attractive entry points for those with a longer investment horizon.
#### Conclusion
The NASDAQ’s performance today, characterized by a severe decline, aligns with the Elliott Wave theory, suggesting that we are in the final stages of a corrective pattern. The anticipated fifth wave down targets the 16,750–16,800 range, and the upcoming jobs report could be a catalyst for a significant reversal. Traders and investors should closely monitor the market’s reaction to this data and be prepared for potential volatility. If the fifth wave completes as expected, the NASDAQ could soon embark on a new upward trend, offering opportunities for those poised to act.
