$COMPQ $NDX Pre-Market Update — Full .382 downside target
### NASDAQ Long Term Pre-Market Wave 4 Update — August 2, 2024
Today might mark a significant moment in the NASDAQ’s long-term Elliott Wave cycle, potentially establishing the low point for Wave 4. This phase is crucial as it sets the stage for the next bullish Wave 5. The technical indicators and market sentiment leading up to the pre-market session suggest a pivotal juncture.
#### Wave 4 Retracement Analysis
1. **Wave 3 Overview**: The third wave in the NASDAQ’s bullish sequence spanned from a low of 14,020 to a peak of 20,691. This substantial upward move laid the foundation for the current corrective Wave 4.
2. **Targeting the Wave 4 Low**: According to Elliott Wave principles, a typical Wave 4 retracement is around 38.2% of the preceding Wave 3. Applying this to the NASDAQ, the retracement target would be in the range of 18,150 to 18,200. This range is critical as it represents a healthy correction within the broader bullish trend.
#### Technical Indicators
1. **Volatility Index (VIX)**: The VIX, often referred to as the “fear gauge,” has climbed to its highest point since the current bull market began, hitting 21. In the pre-market session, it stands at 20.40. Elevated VIX levels indicate heightened market anxiety, which often coincides with significant market bottoms.
2. **Relative Strength Index (RSI)**: The RSI, a momentum oscillator, is likely to test the 32.10 level, matching the low seen during Wave 2. An RSI at these levels typically signals oversold conditions, suggesting a potential reversal is near.
3. **Stochastic Oscillator**: Both the Slow and Fast Stochastics are expected to reset back to zero, indicating deeply oversold conditions. This reset is often a precursor to a significant upward move, as it shows that selling pressure has been exhausted.
#### Market Sentiment and External Factors
1. **Economic Data and News**: Today’s pre-market session will also be influenced by external factors such as economic data releases and geopolitical news. Any positive surprises could catalyze a rally, confirming the Wave 4 low.
2. **Trader Psychology**: The current sentiment reflects a mix of fear and caution. However, such sentiments often precede market bottoms, as excessive pessimism leads to oversold conditions ripe for a reversal.
#### Strategic Implications
1. **Risk Management**: Traders should be vigilant and employ strict risk management practices. While the potential for a significant reversal exists, the market can remain volatile, especially if external factors introduce new uncertainties.
2. **Long-Term Opportunities**: For long-term investors, the completion of Wave 4 offers an attractive entry point. Historically, the transition from Wave 4 to Wave 5 is marked by robust rallies, presenting opportunities for substantial gains.
#### Conclusion
The NASDAQ is approaching a critical level that could mark the end of the Wave 4 correction. If the index retraces precisely 38.2% of Wave 3, we would see a bottom in the range of 18,150 to 18,200. With the VIX at elevated levels, RSI nearing oversold conditions, and Stochastics resetting to zero, the technical setup is primed for a significant reversal.
Today could indeed be a day of infamy, not for further declines, but for setting the stage for the next major bullish phase in the NASDAQ. Investors and traders should stay alert to market signals and be prepared to act on opportunities as they arise. If the market confirms the Wave 4 low, the subsequent Wave 5 could drive the NASDAQ to new highs, continuing the long-term bullish trend.
