Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.
Elliott Wave count are meant to provide context. There is a pattern unfolding in real-time, one of which will play out. By monitoring price levels that are held/broken, it will help us figure out which one is in play.
Big Picture
Below is a weekly chart for the S&P 500, so each bar represents one full week of price action. From this larger perspective, there are three general paths that we are tracking.
- Blue – The bull market that began at the COVID low completed in early 2022. What has followed has been the start of a secular bear market with one more leg lower. This would make the current bull market a cyclical bull uptrend, within a secular bear downtrend.
- Green – This is a variation of the Blue count above. This count has us making one more swing higher in a larger B wave.
- Red – The 2022 bear market was a large correction in an on-going uptrend that started at the COVID low. This pattern would have us around the halfway point in the final 5th wave, which should take us to new highs into 2024.
Where we are now is determining whether this correction is the start of something much worse than most expect (blue), or an excellent buying opportunity (red, green). There are two determining criteria I am looking out for in order to position our portfolio correctly:
- Is the structure of this drop a 5-wave pattern or a 3-wave pattern? A 5-wave pattern will be more vertical and direct in nature. If so, it will support our blue count. If it is a 3-wave pattern, it will have many overlaps and appear to be quite messy. If this manifests, it will support our red or green counts.
- Will the drop hold our critical support at 4315-4275? If we break below this pivot, it will strongly support our blue count. On the other hand, if we are in a minor correction within a larger uptrend to new highs, this level needs to hold.
Positions Report of Nvidia, Microsoft, and Netflix
Nvidia (NVDA)Nvidia (NVDA)
As long as NVDA stays above $340 on any further weakness, the green count remains my primary. This supports the green count in the broader market, suggesting another push higher into the fall/early winter. Furthermore, the drop from the recent high looks to be corrective – 3 waves. We will want to see a 5-wave rally off of this low – or a future low above $340 – to support the next swing to new highs.
It's also worth noting that NVDA is trending down into a time factor, which tends to mark the end of a swing. It’s doing so with the downward momentum at a rare extreme. This, at minimum, leads to a notable bounce.
Microsoft (MSFT)Microsoft (MSFT)
The daily RSI is below the bull market support zone. This supports any bounce in MSFT should be sold, with at least one more low to come. The critical support is $280 for the green count and holding this is critical for any chance at one more high.
Note: We added to MSFT today in the $313 target zone. We believe the evidence still supports one more swing higher. If this changes, we will stop out of this attempt.
Netflix (NFLX)Netflix (NFLX)
Looks like NFLX has a high probability to move down into the $380s. If that next drop breaks below $376, then the Blue count will be my primary, and we will start setting up downside buy zones. If it can hold $376, then I’d expect another high.
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