Nasdaq – Monthly Review
The tug-of-war between bulls and bears in the Nasdaq Arena continues, and today our focus is on assessing the probabilities of a sustained recovery versus a deeper decline.
As always, we examine candlestick behavior, trend structure, momentum dynamics, and the Elliott Wave framework to evaluate how the index is developing and to identify the key levels that will confirm or invalidate the current outlook.
CANDLES
In February, bears pushed the Nasdaq lower, but the decline was not significant enough to confirm a major top. The monthly and 2M closures were relatively neutral, leaving the door open for a renewed rally, though horizontal or slightly downward consolidation could still extend for a few months.
The daily trend remains bearish, and the weekly has lost the 20 EMA. We have also been monitoring a sequence of bearish candles on the larger frames, yet meaningful follow-through has been lacking. In the previous update, we outlined a scenario involving a very deep decline in the event of a strongly bearish monthly close (chart below). While that outcome cannot be ruled out, the current lack of decisive bearish confirmation places that scenario on the back burner.
Overall, NQ is moderately bearish in the short to mid term, with more neutral long-term odds following the latest monthly close.
Elliott Waves
Mid Term
The longer this correction unfolds, the more it resembles a wave 4 of some degree. Wave 4s are known for their complexity and unpredictability, and Elliott did caution that they are often difficult to trade due to their choppy, overlapping nature.
Looking at historical parallels, the current structure resembles the 2023 formation on the inset chart, which ultimately resolved as a bullish flag. If that analog holds, the pattern may require one more relatively sharp decline to complete the final segment — potentially wave Y of 4 — and print a marginal lower low below the November trough before setting the stage for the next advance.
Correction
SUMMARY
While I was preparing for a decisively bearish outcome for the Nasdaq, the recent monthly signals do not support an aggressively bearish stance. The larger time frames closed more neutral than negative, reducing the probability of an immediate deep decline. The more likely path appears to be a continued correction — either sideways or slightly downward — rather than a sharp selloff.
At the same time, the latest analysis of Microsoft suggests it may be forming a meaningful bottom, with similar stabilization patterns emerging in several other members of the Magnificent 7 cohort. Given their heavy weighting in the index, this development cannot be ignored. If these leaders are indeed close to reversing, the Nasdaq itself may also be approaching proximity to a meaningful bottom, even if short-term volatility persists.
