$COMPQ $NDX Elliott Wave Update — Aug 4- Massive gap down — better be a reversal
Note: This is an AI Generated article with Chat GPT
### $COMPQ and $NDX Elliott Wave Update: August 4, 2024
As we move past 3 PM PT, the futures markets have opened, and it appears that the NASDAQ Composite ($COMPQ) and the NASDAQ-100 ($NDX) are set to gap significantly lower than previously anticipated. This sharp decline underscores the heightened market volatility and the palpable fear among investors, as they brace for what could be a pivotal moment in the ongoing Elliott Wave corrective patterns.
#### The Zigzag Formation Nears Completion
According to Elliott Wave theory, a zigzag correction (labeled as ABC) is a three-wave structure where Wave A and Wave C move in the same direction, separated by the corrective Wave B. The current market behavior suggests that we are approaching the final stages of such a zigzag correction. For $COMPQ and $NDX, key support levels are coming into focus that could signal the end of this corrective phase.
#### Key Support Levels to Watch
Two critical support levels are being closely monitored for $COMPQ and $NDX:
- **16,335**: This level represents the 0.382 Fibonacci retracement of the entire move from the previous major low to the high. Retesting and holding this level could suggest a best-case scenario and potentially set the stage for a reversal.
- **16,125**: This level is where Wave A equals Wave C (A = C), a common characteristic in zigzag corrections. Should the futures gap down by approximately 600 points, we would reach this A = C target, indicating a possible completion of the corrective wave.
#### Implications of the VIX Surge
The Volatility Index (VIX), a key measure of market fear and volatility, is likely to spike well above 30 by the market open. This surge in the VIX is indicative of extreme fear and often correlates with market bottoms, as panic selling reaches its peak. Historically, such spikes in the VIX have preceded significant market reversals, offering a glimmer of hope amidst the current downturn.
#### The Need for a Violent Upside Reversal
While reaching the A = C targets for $COMPQ and $NDX might mark the end of the zigzag correction, it is crucial that we see a violent upside reversal to confirm this bottom. Without a strong reversal, the market risks extending the downtrend into a more severe 1.618 extension of Wave C, which would be far more damaging.
#### Broader Market Context
This corrective behavior is not isolated to the NASDAQ indices. The S&P 500 ($SPX) and the Dow Jones Industrial Average ($DJI) are also approaching their respective A = C targets. The convergence of these indices hitting their corrective targets simultaneously could amplify the significance of the support levels being tested.
#### Conclusion
The opening gap down in the futures markets for $COMPQ and $NDX signals a critical juncture. With key support levels at 16,335 and 16,125 in sight, the market is on the cusp of potentially completing a zigzag correction. The VIX surge to over 30 underscores the extreme fear in the market, which often precedes significant reversals. However, for this to be a true bottom, a violent upside reversal is essential. The next trading sessions will be pivotal in determining whether this corrective phase concludes or if the market faces a more extended downturn. Investors should remain vigilant and prepared for swift market movements as these scenarios play out.
