Nasdaq: further Upsides Expected

NASDAQ advances for the third day in a row despite fears of the coronavirus spread.

NASDAQ 100 moves up on Wednesday 33.6 pts, or 0.35%, reaching 9,561.3 pts, Dow Jones gains 98.5 pts, or 0.34%, touching up to 29,399.8 pts, while S&P 500 climbs 9.2 pts, or 0.27%, climbing up to 3,370.6 pts.

The NASDAQ 100 tech index, in its log-scale 2-week chart, shows the price progressing in a bullish sequence that began in early March 2009 when the price found buyers in the 1,040.2 pts.

This bullish sequence presents the price action running in the wave (5) of Intermediate degree labeled in blue. At the same time, we observe the projection of the ascending channel, which displays the fifth wave touching the upper line of the channel.

 This movement points us to observe that the price could increase its acceleration as it approaches the end of the long-term bullish cycle.

 According to the psychology of the fifth wave, the climactic movement should be headed by a context of extreme euphoria among market participants.

The following chart shows the NASDAQ in its daily timeframe. From the figure, we observe the bullish movement, which still is intact. The upward sequence started with the Santa Claus rally in late 2018 when the price found support in the 5,802.4 pts.

In a similar way as in its 2-week chart, the ascending channel shows wave 3 of Minor degree labeled in green touching the upper line of the channel.

 At the same time, from the internal structure of wave 3 of Minor degree, we see that the price advances in the fifth wave of Minute degree labeled in black. This context leads us to conclude that wave 3 should be ending soon.

On the other hand, we see that wave 2 of Minor degree developed a triangle structure. According to the alternation principle described by Elliott, this context leads us to foresee that wave 4 could be a simple correction.

In other words, wave 4 could unfold in a shorter duration than wave 2. In turn, this movement could lead the NASDAQ to produce a move with greater acceleration.

In conclusion, the trend in NASDAQ continues to be bullish. Short term, the price could develop a retracement towards the area of 9,000 points, which would allow the incorporation of new participants waiting for the development of the last long-term bullish movement, which could probably hit the psychological barrier of 10,000 points.

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