$COMPQ $RSI $VIX NASDAQ Elliott Wave Bottom Updates Jul 30

• *NASDAQ, RSI, VIX, SOX Elliott Wave Update — July 30, 2024: Bottom Requirements**
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The market has been navigating through a significant correction, characterized by volatility and uncertainty. However, recent technical indicators suggest that a bottom may be forming. Key market indices, including the NASDAQ, RSI, VIX, and SPX, are all showing signs pointing towards the end of the corrective phase and the potential for a new bullish wave. This article delves into these indicators, the conditions necessary to confirm a market bottom, and what investors should look for in the coming days and weeks.

### Key Indicators Pointing to a Potential Bottom:

1. **ABC Correction Reversal:**
The NASDAQ has recently completed an ABC correction pattern, a common structure in technical analysis that indicates a three-wave corrective move. In this case, the C wave has equaled the A wave in magnitude — a typical ending point for such patterns. The completion of the ABC correction is often followed by a reversal, suggesting a possible end to the downtrend. This pattern is crucial for analysts and investors alike, as it can signal the exhaustion of selling pressure and the beginning of a new upward trend.

2. **RSI Readings:**
The Relative Strength Index (RSI) for the NASDAQ (NDX) recently hit 32.6, which is close to the 32.10 low observed during the previous Wave 2 correction. The RSI is a momentum oscillator that measures the speed and change of price movements. An RSI below 30 typically suggests that the market is oversold, while a reading above 70 indicates it is overbought. The current low RSI levels imply that the market may be oversold and could be poised for a reversal, providing a buying opportunity for investors.

3. **VIX Levels:**
The Volatility Index (VIX), often referred to as the “fear gauge,” measures market volatility and investor sentiment. The VIX recently hit 19.50, slightly above the 19.44 peak observed earlier in the correction. Historically, elevated VIX levels are associated with heightened fear and uncertainty, which often precede market bottoms, especially in the context of a long-term bull market. The recent spike in the VIX suggests that market participants are fearful, but this could also mean that a reversal is near as fear typically peaks at market bottoms.

4. **Stochastic Indicators:**
Both the Slow and Fast Stochastic Oscillators, which are used to identify overbought and oversold conditions, have recently plunged into oversold territory. The readings have hit 0 and 0–20, respectively. These extreme readings indicate that the selling momentum may be exhausted, and the market could be ready for an upward reversal. Stochastic oscillators are valuable tools in timing market entries, and current readings suggest that the market is at or near a turning point.

5. **S&P 500 Reversal:**
The S&P 500 has also shown signs of bottoming, having completed an ABC zigzag correction. The index reversed after hitting the A = C level, a critical point where the magnitude of the corrective waves is equal. This reversal aligns with other market indicators suggesting a bottom, providing further evidence that the broader market may be ready to move higher.

### Conditions Needed to Confirm a Bottom:

1. **.786 Reversal of the C Wave:**
The first crucial level to watch is the .786 retracement of the C wave, with ultimate resistance at 17,850. This level is approximately 400 points above the current market level. A break above this resistance would be a strong signal that the market has established a firm bottom. The .786 retracement level is significant in technical analysis as it represents a deep retracement, often seen before a market resumes its primary trend.

2. **.786 Retracement of the Entire Zigzag:**
For a more definitive confirmation of a market bottom, the NASDAQ needs to break through the .786 retracement of the entire zigzag correction, which targets 18,400. Achieving this level would suggest that the market has fully absorbed the correction and is ready to resume its long-term uptrend. This retracement level is crucial because it represents a key Fibonacci level, often used to identify potential reversal points.

3. **Potential Wave 3 of 3:**
The most optimistic scenario involves these breakouts leading to a Wave 3 of 3 up. In Elliott Wave theory, the third wave in a sequence is typically the strongest and most extended wave. If this scenario unfolds, it would indicate a robust bullish phase, potentially lasting into the year-end and providing substantial upside. This scenario is often referred to as the “dream wave” because of its potential for significant gains.

### Conclusion:

The recent technical signals from the NASDAQ, RSI, VIX, and other indices suggest that a market bottom may be forming. However, to confirm this, key resistance levels need to be broken. Specifically, the market must surpass the .786 retracement of the C wave at 17,850 and the entire zigzag at 18,400. Investors should closely monitor these levels, as breaking through them would provide strong evidence of a market bottom and the resumption of a long-term bullish trend.

While the signs are promising, it is essential to approach the market with caution. The conditions are ripe for a potential bottom, but confirmation is key. Investors should be prepared for both scenarios — a confirmed bottom leading to a new bullish phase or further consolidation if resistance levels are not breached. As always, staying informed and making data-driven decisions is crucial in navigating market corrections and potential reversals.