The bounce turned into a double zigzag correction which had a higher target than an a-b-c would accommodate. There is a new Head & Shoulders formation with the top of the right shoulder matching the length of the left shoulder at 1903.58, just under the 200-day Moving Average at 1906.07. It may not make either target.

Intermediate Wave (1) may turn out to be either a Leading Diagonal with five Minor A-B-C waves, or an (A)-(B)-(C) wave in a larger degree Wave [1]. The pattern will work itself out, as it did in the decline in gold.

The decline measured 18.49 days, while this retracement appears to be only 1.72 days, if complete. Today is also almost exactly at the halfway point of the Panic Decline that I had brought to your attention in September. The second half may be much more exciting.

NDX is challenging the trendline of its bullish trading channel. This may be the end of the line for Wave 2 or B. There is no Head & Shoulders formation as there is in SPX, but the Orthodox Broadening Top may be our guide for Wave 3 or C.

Wave 3 or C only needs to be 2 times the size of Wave 1 or A to meet the Broadening Top target. This relationship or an even larger one is common in a Wave (c), especially when it is at a Super Cycle degree.

For those who traded out of their short positions, this is a very likely re-entry place.

Regards,

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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