Nasdaq – Weekly Analysis
This week, Nasdaq has rallied as if tomorrow were optional. Let’s reassess our previous call and evaluate whether any adjustment is needed. As always, we examine candlestick behavior, trend structure, momentum dynamics, and the Elliott Wave framework to assess how the index is evolving and to identify the key levels that will confirm or invalidate the current outlook.
CANDLES
After confirming a bottom on the weekly frame last week, Nasdaq rallied. However, the rally was somewhat reckless—too fast and too far. While the weekly formed an 8/20 EMA bullish cross, the price moved above the Bollinger Bands, which introduces risk. At the same time, the daily and all lower frames have been grossly overbought for a prolonged period (possibly one of the longest on record), and a pullback is due.
The main question is the size and character of that pullback. It may have already started across major indices on Friday, where a clean impulse off the top was observed and noted on Discord. If NQ and other indices develop higher-degree impulses in the same direction, it could mark the beginning of a broader top for NQ and SPX. Notably, the Dow has not made a new ATH yet.
There are two most probable scenarios: a multi-week consolidation before the next leg up, or an abrupt reversal. The coming week will be key. At this point, an immediate continuation of the rally has the lowest probability.
Overall, Nasdaq is mixed: short-term neutral with a risk of pullback, mid-term bullish, and long-term still bearish, pending a monthly signal. In these conditions, the April monthly close is critically important.
Statistics – 8/20-Week EMA Cross
Nasdaq has advanced almost 7% since this statistical call on April 9. All estimates remain intact. Tactically, Nasdaq needs to cool off and normalize short-term technicals through a horizontal or slightly downward move. This aligns with one of the scenarios discussed in the candle section.
Elliott Waves
Mid Term
I am tracking two counts as most probable: the green and the red. I am leaning toward the green for the same reasons discussed earlier for SPX, including the very shallow retrace for wave (2). However, statistics for the 8/20 EMA weekly cross suggest the red count also has a solid place in the probability pool. The key moment will be the next pullback. If NQ holds above the March low and starts another rally, the current wave can be treated as wave 1 of (3) in red. A break below the March low would have very serious consequences, though it is premature to discuss them now. The red count would also closely resemble the correction in July–October 2023 and the subsequent rally, as shown on the inset.
On another note, the daily NQ futures chart shows 10 consecutive green candles. If we discount a minor red candle on April 3, there are effectively 13, which represents an extreme stretch. A pullback is a must.
SUMMARY
Nasdaq has rallied ~7% since our April 9 call, with the weekly confirming a bullish 8/20 EMA cross. However, candle structure shows an extreme stretch (10–13 consecutive green candles), and daily/lower frames are heavily overbought, making a pullback necessary. Short term is neutral with high pullback risk, while mid term remains bullish and the long term hinges on the April monthly signal.
From an Elliott Wave perspective, both green and red counts remain in play, with a preference for green due to the shallow wave (2). The next pullback is critical: holding above the March low would support the red scenario (waves 1 and 2 of (3)), while a break below would carry significant negative implications.
