NASDAQ $COMPQ Elliott Wave Midday Update Aug 7, 2024
### NASDAQ $COMPQ Elliott Wave Update — August 7, 2024, 10:48 AM PT
The NASDAQ Composite Index ($COMPQ) exhibited a highly volatile trading session this morning. Despite a strong gap up and an initial breakout, the entire rally from 16,100 was completely faded, and the index moved into negative territory. This dramatic reversal has left many traders and investors questioning the sustainability of the current rally.
#### Morning Rally and Subsequent Fade
The NASDAQ gapped up significantly at the open, suggesting strong buying interest and optimism among market participants. This move saw the index climb from the support level of 16,100 up to its morning highs. However, the rally was short-lived. As the morning progressed, selling pressure intensified, causing the NASDAQ to give back all its gains and dip below its starting point, effectively erasing the entire rally.
#### Elliott Wave Analysis
1. **Wave Count**:
— The current wave structure suggests that the NASDAQ might still be in a corrective Wave 2. After completing a strong Wave 1 off the recent lows, the index appears to be retracing, potentially forming a Wave 2.
— For this corrective Wave 2 to remain valid within the Elliott Wave framework, the support level at 16,100 must hold. This level is crucial as it represents the .618 Fibonacci retracement of the recent move.
2. **Fibonacci Retracement**:
— The recent rally from the lows nearly achieved a 1,000-point gain. A .618 Fibonacci retracement of this move places significant support around the 16,100 level. This Fibonacci level often acts as a strong support in corrective waves and is a critical level to watch.
3. **Support and Resistance**:
— **Support**: The 16,100 level is now the line in the sand. If this support holds, it will validate the corrective Wave 2 scenario and set the stage for a potential Wave 3 rally.
— **Resistance**: The initial breakout level and the morning highs will now act as resistance. The index needs to reclaim these levels to resume its upward trajectory.
#### Market Sentiment
The sharp reversal this morning indicates a high level of uncertainty and volatility in the market. Investor sentiment remains fragile, with rapid shifts between optimism and pessimism. This volatility can be attributed to several factors, including macroeconomic concerns, earnings reports, and broader market dynamics.
#### Key Levels to Watch
1. **16,100 Support**:
— This is the critical support level that must hold for the bullish scenario to remain intact. A break below this level could invalidate the current wave count and suggest further downside.
2. **Morning Highs**:
— Reclaiming the morning highs will be essential for confirming the continuation of the rally. This will require sustained buying interest and a shift in market sentiment.
#### Conclusion
The NASDAQ’s performance today highlights the complexities and challenges of navigating volatile markets. While the initial gap up and breakout suggested strong bullish momentum, the subsequent fade has introduced uncertainty. The 16,100 support level is now the key to maintaining the current bullish Elliott Wave count.
If this level holds, it will provide a solid foundation for the next leg up, potentially leading to a strong Wave 3 rally. However, a failure to hold 16,100 could lead to further declines and a reevaluation of the current wave structure. As always, traders and investors should remain vigilant and adaptable, keeping a close eye on these critical levels and market developments.