$COMPQ $NDX $TQQQ Elliott Wave Midday Update — Bottom is in.
### NASDAQ Midday Elliott Wave Update — July 31, 2024
Today, the NASDAQ has experienced a significant reversal, marking a potential end to the recent downtrend. This turnaround comes amid a confluence of technical indicators and market sentiment factors, suggesting a strong bottom formation. As of midday, the NASDAQ has rebounded sharply, driven by oversold conditions and pivotal technical patterns, and traders are closely watching the upcoming Federal Reserve decision for further cues.
#### Indicators Signaling a Bottom
1. **RSI and VIX Readings**: The Relative Strength Index (RSI), a momentum oscillator, dropped to 32.6, indicating that the NASDAQ was in oversold territory. Additionally, the VIX, often referred to as the “fear index,” fell to 19.5. Such low VIX levels typically indicate reduced market volatility and a potential shift in sentiment from fear to optimism. These readings suggest that selling pressure may have exhausted, paving the way for a rally.
2. **Stochastic Oscillators**: Both Slow and Fast Stochastic indicators have fallen into the 0–20 range, further underscoring the oversold conditions. This range often signals a reversal, as the indicators suggest that the market is due for a corrective move to the upside.
#### Elliott Wave Analysis: Completion of the Zigzag
The NASDAQ’s recent price action has completed a classic zigzag correction, characterized by three waves (A, B, and C) that typically move against the larger trend. This pattern culminated in a delayed fifth wave, but the strength of the current reversal strongly suggests that the bottom is in place. The completion of the zigzag, combined with the aforementioned technical indicators, provides a compelling case for a sustained upward move.
#### The Federal Reserve’s Role
The market’s focus now shifts to the Federal Reserve’s decision later today. The Fed’s announcements on interest rates and monetary policy could be a significant catalyst for the NASDAQ. If the Fed’s stance is perceived as dovish or supportive of continued economic growth, it could propel the NASDAQ towards the 17,900 level, which represents a 78.6% retracement of the recent C wave. Such a move would further confirm the reversal and signal a return to bullish momentum.
#### Short-Term Outlook and Key Levels
1. **Immediate Resistance**: The immediate target for this rally is around 17,900. Breaking through this level would be a strong indication that the correction is over and that the NASDAQ is poised to resume its upward trajectory.
2. **Support and Validation**: Should the market fail to hold its gains, key support levels will need to be monitored to validate the strength of this reversal. A failure to maintain current levels could suggest that the correction is not yet complete, although this seems less likely given the strong technical indicators.
#### Conclusion
The NASDAQ’s midday reversal today appears to mark a significant turning point, supported by a range of technical indicators and the completion of a corrective zigzag pattern. While the upcoming Federal Reserve decision remains a wildcard, the technical setup suggests that the market may have found a bottom. The critical level to watch is 17,900, which, if breached, could signal the start of a new bullish phase. As always, traders should remain vigilant and consider both technical and fundamental factors when making investment decisions.
