Rally Not Done Despite Bumpy Road Ahead
The Nasdaq 100 reversed from the 16500 S/R and corrected sharply. Nonetheless, the rally is likely not over yet. A final swing towards 17000-19000 remains the most likely scenario. However, the question remains: When does the next sustainable rally start?
The Nasdaq 100 broke below the bull trend that guided the index higher since September 2020. The correction bounced off the 15180 S/R in mid-January 2022. It could stretch sideways into Q2/2022. The red scenario depicts that and gets confirmed if price action remains above 15180. Red shows how the Nasdaq 100 swings higher within a corrective X-wave of minor degree. Eventually, a final washout selloff completes intermediate wave (4) around 14400 before the next sustainable leg up begins. A sustained break below 15180 signals that the next leg down unfolds already. Black shows how that correction could unfold. The black path targets the 14400 S/R directly. In February, it could end the fourth wave of intermediate degree with a double zigzag. Like the red scenario, a final leg up unfolds, most likely towards 17000-19000.
The rally is probably not done to the upside with or without an extending correction. Nonetheless, the main question is when will a substantial correction unfold that ends a fourth wave. It could be happening right now or after another leg up. A narrative brewing in China could potentially result in a small storm. Omicron hit China and their zero covid policy might result in larger lockdowns. The timing is bad as supply chain issues just seem to improve slightly. Nonetheless, the major US indices and tech stocks will probably weather the storm within a fourth wave.
The bottom line is that odds are equal between the black and red paths. Both imply that the Nasdaq 100 is not done to the upside yet.
The Nasdaq 100 broke below the bull trend that guided the index higher since September 2020. The correction bounced off the 15180 S/R in mid-January 2022. It could stretch sideways into Q2/2022. The red scenario depicts that and gets confirmed if price action remains above 15180. Red shows how the Nasdaq 100 swings higher within a corrective X-wave of minor degree. Eventually, a final washout selloff completes intermediate wave (4) around 14400 before the next sustainable leg up begins. A sustained break below 15180 signals that the next leg down unfolds already. Black shows how that correction could unfold. The black path targets the 14400 S/R directly. In February, it could end the fourth wave of intermediate degree with a double zigzag. Like the red scenario, a final leg up unfolds, most likely towards 17000-19000.
The rally is probably not done to the upside with or without an extending correction. Nonetheless, the main question is when will a substantial correction unfold that ends a fourth wave. It could be happening right now or after another leg up. A narrative brewing in China could potentially result in a small storm. Omicron hit China and their zero covid policy might result in larger lockdowns. The timing is bad as supply chain issues just seem to improve slightly. Nonetheless, the major US indices and tech stocks will probably weather the storm within a fourth wave.
The bottom line is that odds are equal between the black and red paths. Both imply that the Nasdaq 100 is not done to the upside yet.
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