Elliott Wave & Projected Stock Surge into 4Q 2014
05/14/13 INSIIDE Track Special Report: With the recent breakout (Nasdaq 100 finally exceeding its Sept. 2012 high), Stock Indices have confirmed the development of their latest impulse wave. While I do not use Elliott Wave for trading decisions or strategies (and do not use it for specific analysis or signals), it does serve a useful purpose in identifying whattype of trend a market is in and what stage of that trend is currently unfolding. It also provides important targets and support/resistance levels.
With regard to the ‘type of trend’, I am referring to an ‘impulse’ or a ‘corrective’ wave. An impulse wave is in the same direction as the underlying trend and usually unfolds in 5 waves. A corrective wave is against the underlying trend and usually unfolds in 3 waves (A, B & C).
In the case of the Nasdaq 100, the move from Sept. 2012 into early-2013 was always perceived to be corrective, which is why it was labeled/described as an ‘A-B-C’ (or ‘a-b-c’… the ‘case’ of the letters is used to distinguish between higher and lower degree waves) and why it was expected to find 6-12 month support at2400–2425/NQ – its ‘4th wave of lesser degree’. That is where a corrective wave ideally bottoms.
Combined with cycles, the 3-6 month outlook was for a drop to 2400–2425/NQ, a decline into Jan./Feb. 2013 (when multiple cycles would turn back up) and a bullish period to follow..All of this remains in the bigger context of the multi-year wave structure and cycle structure.
The cycle structure anticipated a low in Jan./Feb. 2013 after which the Cycle Progression (low-low-low-low) would turn bullish – and potentially very bullish – and project an overall advance into the next phase in April–June 2014…
Bottom Line: From a wave structure standpoint, the bottom line is that the Nasdaq 100 has confirmed the progression of its next impulse wave…it could stretch all the way out until 4Q 2014…
Cycles
As reiterated in recent publications, major cycles converge in 4Q 2014 and are more likely to produce a high… Before elaborating, I will reprint the highlights of this analysis from the May 2013 INSIIDE Track:
“Depending on what transpires in the coming weeks, Stock Indices could begin to narrow the possibilities for the next Major cycle convergence – in the 4thQuarter of 2014. That is when, among other things, the following cycles reach fruition (most salient in the NQ-100 Index):
— 3-year low-low-(?) Cycle Progression.
— 6-year low-low-(?) Cycle Progression.
— 12-year low-low-(?) Cycle Progression.
— 7-year high-high-(?) Cycle Progression.
— 40-Year Period of Testing from the late-1974 bottom…
…as well as related parallels and possible retracements of recent multi-year trends.
As is often the case, mid-points and anniversaries can provide some clarifying turning points. As a result, 4Q 2013 is likely to be one of those – since it arrives 360 degrees prior to the 4Q 2014 cycle convergence…”
…all the trends are currently up and need to be given the benefit of the doubt until price action signals otherwise. So, although 40-Year Cycles do portend some related events, I do not expect an exact replay of 1973–’74. [Refer to the 05/14/13 INSIIDE Track Special Report for add’l charts & analysis that portend a continued stock market advance into late-2014 – when the 40-Year Cycle of Stock-flation reaches fruition.]