$COMPQ $NDX $SPX Elliott Wave Update — Zigzag Bottom Formations Complete?
### $COMPQ $TQQQ $NDX $SPX Elliott Wave Update — August 3, 2024: Best Case Scenario
The NASDAQ Composite ($COMPQ) has been in a steep decline for almost a month, but signs indicate that it may have found or is near finding a bottom as of last Friday. Understanding the potential wave structures and key levels can help investors prepare for the next market moves.
#### NASDAQ’s Wave Structure
The current formation suggests a classic Elliott Wave 1–2–3–4–5 structure:
- **Wave 1:** Initial decline.
- **Wave 2:** Brief corrective rally.
- **Wave 3:** Extended downward move.
- **Wave 4:** Recent .382 retracement observed on Wednesday.
- **Wave 5:** The sharp drop seen on Friday.
The critical observation here is the potential completion of the 5th wave. The Wave 4 retracement reached .382 of the Wave 3 decline, followed by a gap down, which is typical of a final 5th wave in a bear phase.
#### S&P 500’s Zigzag Formation
The S&P 500 ($SPX) exhibited a classic zigzag pattern, completing its C wave in just two days. The precise equality of Waves A and C suggests a significant correction is nearing its end:
- **Wave A:** Initial decline.
- **Wave B:** Brief rally.
- **Wave C:** Final downward move equating Wave A’s length.
Given that the NASDAQ often follows similar corrective patterns, there’s a strong possibility that it has also completed its corrective phase, marked by an A = C formation.
#### Key Levels to Watch
Next week, several critical levels and scenarios will be pivotal:
- **Wave 3 Retracement Level:** 16,335 is the .382 retracement of the entire Wave 3 decline. This level serves as a significant support and potential reversal point.
- **Scenario 1 — Big Rally:** A substantial gap up on Monday could indicate a swift reversal and the beginning of a new bullish phase.
- **Scenario 2 — Ending Diagonal:** A slower, more gradual decline to the 16,335 level over a few days could form an ending diagonal pattern, which typically precedes a reversal.
In either scenario, whether a sharp rally or a gradual decline, reaching 16,335 would mark a potential bottom formation.
#### The VIX Indicator
The VIX, often referred to as the “fear gauge,” spiked to 29.66 on Friday. Such a high level is a strong contrarion indicator, signaling extreme market fear:
- **High VIX Levels:** Extreme fear often precedes significant market bottoms. The VIX hitting near 30 reflects a market in a state of maximum fear, suggesting that a bottom may be near.
### Conclusion
The best-case scenario for the NASDAQ and related indices like $TQQQ, $NDX, and $SPX is that the market is either at or near a significant bottom:
- **NASDAQ ($COMPQ):** Watch for either a big rally on Monday or a slow decline to the 16,335 level.
- **S&P 500 ($SPX):** The completion of the A = C zigzag pattern hints at a potential bottom.
- **VIX at 29.66:** This high level of fear often marks significant market bottoms.
Investors should be prepared for a potential reversal, whether it comes swiftly on Monday or gradually over the next few days. Understanding these wave structures and key levels can help in making informed trading decisions as the market transitions from a corrective phase to a new bullish trend.
