Wednesday’s trade was volatile in both directions from the opening to right into the bell. Then it appears that Facebook aka Metaverse detonated an atomic bomb under the stock after reporting earnings. FB dropped from 323 to 243 before attempting to pull itself up out of the gutter. The NQ dropped as quickly from the close at 15153 to an after hours low at 14825. Nothing like kicking the wind out of the bulls sails! The NQ though may not be in imminent danger as many likely believe. Yesterday, I adjusted the Elliott count and labeling to show the completion of the Intermediate wave 4 correction and laid out the path to new highs as well. Today’s 15260 high during Globex did negate the previous count and basically cemented into place the current count. However, saying that I can’t rule out the potential for a killer Minor wave 2 correction. That is likely what the NQ is currently tracing out. If the Globex high at 15260 completed Minor wave 1 of Intermediate wave 5, the the decline in progress now would be labeled Minor wave 2 of 5. So what can we expect — 2nd waves can be viewed and are often considered a sudden reversal — well that would fit after today’s FB earnings report. Second waves can retrace nearly all of wave one before the market would then perform an additional reversal as wave three takes over. So all is not lost just yet. For tomorrow I suspect we will continue to see downside pressure. Next support comes in within the zone at 14735,(the hourly 200 MA) 14729, (price support) and 14713, (Fibonacci support). A break below 14713 drops support to 14543 to 14373. Again, a break below the hourly 200 MA would/should ignite additional acceleration to the downside. The level the NQ can’t break under the current count is 13825.
February 2, 2022