For reference to terminology used, please look at technical analysis under our resources section here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.

Elliott Wave counts are meant to provide context. Each colored count represents the most probable paths given the current price data. 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, so that we can better manage risk.

The Big Picture

Many are now calling for the start of a new secular bull market. The consensus went from being excessively bearish in early 2023 to now being excessively bullish. Some of the most prominent bearish voices are even flipping into a much rosier outlook for the coming years.

Though we are open to this scenario, and even game planning for what that would look like, our broad market technical analysis is suggesting caution, for now.  One of the primary tools I use to analyze the broad market is Elliott Wave. It is excellent at providing context as well as price levels that will confirm a thesis or negate it. You can read more about it to help follow along here; however, the foundation states that all markets move in 5 waves up in the primary direction, followed by a 3 wave retrace, which then repeats.

With that in mind, the below chart shows the S&P 500 starting from the March low in 2009.

The pattern this secular bull market has taken is a mature 5 wave pattern that has extended into January 2022. The 3rd wave topped where it was supposed to, and the 5th wave into 2022 even extended. From this analysis, the problem with the thesis that we are starting a new secular bull market is twofold:

1)    We have not had a sufficient 3 wave retrace of the secular bull market that started in 2009. This would take years to develop and likely take us back to the COVID lows. Though we have seen some sharp and complex drops within this large 5 wave uptrend, we have yet to see one sufficient in both time and price to constitute a legitimate retrace of the secular bull market.

2)    This means that is we are starting a new cycle within the secular bull market, we have to be extending the 5th wave that started off the COVID low. The problem with this thesis is that we are already very extended, and 2022 was simply too deep to suggest that we are going to extend too much higher.

This means that the secular bull market that started in March of 2009 likely terminated in January of 2022, or is close to terminating sometime in 2024. We have thus started or are close to starting a secular bear market, which would be the counter move to the 12 year secular bull market that started in 2009.

Where we will pivot, and instead plan for the continuation of this cyclical bull market is.

2024 Price Analysis

If we zoom in on the structure off the 2022 top, I’m counting 2023 as an extended B wave within a larger bear market. The only question is how much longer can this stretched pattern extend into 2024?

There are two interpretations on how I believe the price action can best be explained:

Green – The October 2022 low was the end of the A wave down, and start of the B wave up. The structure of this B wave is in the form of a very complex pattern that is rare to see on such a large scale. If this is playing out, we should see a top in January, followed by a deep retrace into February, which will be followed by one final swing higher into March/April. This will mark a major top.

Red – This count is the same as the above green count. The only difference is that we took a more direct path to the larger top, which would likely end sometime in late January.

2024 Time Analysis

If we analyze the cycles that are in play into the first half of 2024, we can get a good idea on when to expect a major inflection within the markets. These cycles continuously show up at major and minor turns in the market, and tend to have the most significance when they cluster together. Below is the NASDAQ-100, which shows four big clusters of cycles to look for as we in 2024. Two of these are in January and February.

1)    January 17 – 30

2)    February 15 – 29

More times than not, these cycles mark reversals in the trend. So, what is most important is how the market is trending into them. We monitor these dates closely and I discuss them in my weekly webinars as how we trend into them is key to interpreting how the market will play out in the weeks that follow.

2024 Cycle Forecast

W.D. Gann offered an annual forecast based on a combination of major cycles that tend to play out in the markets over time. Most are familiar with the 90 year cycle, for example, which is one of Gann’s cycles that he monitored, which lends credibility to his cycle research. For example, the panic of 1839 led to a painful depression in American economic history. Ninety years later takes you to the 1929 top, and 90 years after that takes you to the COVID top.

So, by combining the major cycles Gann identified into a weighted average, we can get a good approximation of both the trend and turning points within a given year. For example, the below image is a weighted average of these major cycles for 2022 (below), with what the Dow Jones did in 2022 on top. Note how the forecast mapped the major trends and turning points very closely.

If we take the same weighted forecast for 2023, note how closely it tracked both the trend and turning points compared to how the market traded.

So, using the same techniques, if we apply these weighted cycles to 2024, here is what we get:

The cycles forecast suggests a high in January, a low in March/April, followed by another low in May/June. This will lead to a bounce into the end of the year. Once again, what is important to note is trend and turning points.

These forecasts are not perfect, but they tend to help identify the major turning points and direction within the market. I always start the year with a weighted average of all major cycles, and then identify the one or two that are exhibiting the most influence. So, as we move into 2024, we will likely make adjustments as we go along to help us stay on the right side of these major market moves.

Supporting Markets

The markets that I am currently tracking to help us determine whether the red or green count is playing out are below. The below markets either have much cleaner wave counts, or are major markets that tend to lead tech.

NASDAQ-100 (NDX)

NDX has more room to run higher. My upper targets are 17737 – 18050. The main question in determining if it will run higher is dependent on where NDX bottomed. If it bottomed in October of 2022, then we should see a deep correction followed by a bigger push into these targets into late Q1 of 2024. This would be the green count.

If the low was instead in January of 2023, then this would be the top, with maybe one more minor push into late January. This will be the red count. The tell will be the nature of the drop. If it is a 5 wave pattern, then we are dealing with red; if it is a 3 wave drop, then we are dealing with green.

Microsoft (MSFT)

MSFT has a very clean wave count, and is currently trading at a risky spot. If the 2020 breakout was the halfway point for the 5 wave move off the 2009 low, then the $378 price range is the target for the final swing, which is exactly where price is struggling to break above.

What is concerning is that we have completed a full 5 wave move off the 2009 low, and hit our long term target. There is room for an extension to the $415 region, but the risk is elevated considering we are talking about the final 5th wave within a larger 5th

What this means is that the 2023 uptrend was the final 5th wave, which is still playing out. If we zoom in on 2023, MSFT appears to have room for another swing higher. If we are in the minor 4th wave, the minor 5th wave should take us into the $400-$415 region before terminating.

Ark Innovation ETF (ARKK)

Arkk’s structure is very clean, right now. I believe ARKK has one more larger swing higher, which will complete the large corrective bounce off the December 2022 low. If accurate, ARKK still has one more new low to complete the downtrend that started in 2021.

ARKK is currently in the final move of this corrective pattern, which is playing out as a 5 wave pattern. If you note the current uptrend, it looks like it still needs a 4th wave, which I believe we are seeing, and then should get one more 5th wave higher, which would be targeting around $59. As long as the current drop holds $46, then we should see one more swing higher in a final 5th wave push. Below $46, and the odds start favoring the top being in.

Amazon (AMZN)

Amazon hit our major target that we laid out in October. This stock, along with META and the NASDAQ-100, was the primary reason we were not calling for the top in July of last year. They were showing incomplete patterns and needed a final 5th wave higher, which we now have.

Now that we have this 5th wave, and it hit our target, we have a very mature pattern. Like MSFT, we could extend a little higher, but I will be looking for a reversal soon. How the reversal forms will be very telling – 5 waves down is bad, while 3 waves down suggests that we can push higher.

The Dow Jones Industrial Average (DJI)

Note the pattern off the October 2022 low. It’s hard to look at the messy, overlapping pattern as the start of a new bullish uptrend. In fact, it resembles a corrective, 3-wave pattern. This means that once the current 5 wave uptrend is over, we should see a sharp drop that breaks the October 2022 lows.

In order to negate this thesis, we would need to see a vertical break above 40,000. Short of this, the above scenario best fits the price pattern, which suggests that we have, at best, one more swing higher after a small correction.

The Japanese (Nikkei)

It may seem strange that a tech portfolio would follow the Japanese market, but this is a key market to track for tech. The reason for this is that the Nikkei has led the NASDAQ for many years, and it has a history of topping and bottoming just before the NASDAQ.

That being said, the Nikkei appears to need one more minor swing before completing its final 5th wave. If this happens, we will look for the Nikkei to make lower highs while the NASDAQ makes a higher high for the final confirmation that we are close to a major inflection point in the markets.

In conclusion, the above markets are some of the key markets that can help us identify what larger count in the broad market is playing out – green or red. It appears that stocks like AMZN and the Japanese Nikkei are very close, while MSFT, ARKK and DJI suggest that they have one more swing higher before completing their uptrend. Like all tops, I imagine this one will be a process. Look for divergences as some markets and stocks will top before others. If this happens and we see any continued push higher with fewer names making new highs, then we will have a strong early warning sign.

Macro

In November, the FOMC was steadfast on their stance that rates will stay higher for longer. In December, they shocked the markets with an about-face, claiming victory of inflation with the expectation of 3 rate cuts in 2024. This announcement sent markets vertical, as risky high beta stocks led the way.

What the FED and markets are pricing in is a true soft landing. In other words, inflation got out of control and the FED was able to successfully raise rates at the right speed to bring inflation down from the demand side, while avoiding a recession. Whether this will actually play out is yet to be seen. However, we thought it would be helpful to our readers to see what needs to happen in 2024 in order for this scenario to play out:

1)    Economic data needs to continue to soften. However, it has to soften into a sort-of goldilocks range. The balance will be weakening the employment market just enough to reduce core inflation, but not too much to cause a recession.

2)    Unemployment needs to go higher, but not too high. As unemployment goes higher, the historic disinflation that we have seen in 2023 will be able to actually reach the FED’s 2% target. As of now, core inflation is still at 4%, which is double what the FED is targeting. Rising unemployment will slow spending, and get core inflation back to the 2% target.

3)    Household checkable deposits are strong, and need to stay this way in order to propel the business cycle forward. Though the trend is down, the long-term trend suggests that households are still flush with cash, which is necessary to both avoid a recession and continue the business cycle.

4)    Energy has to stay within a sideways trend or continue to trend lower. This is key, as energy was the primary reason for the level of disinflation that we saw throughout 2023. Note below how core inflation has been stubborn between 5-4% throughout most of 2023, yet the headline CPI number kept moving lower.

The reason for this is because energy prices have been in a steep bear market since August of 2022. This has been the primary reason why the CPI number has continued lower, and it needs to stay this way in order for inflation to hit the FED’s 2% target, and therefore succeed in an actual soft landing.

History says this is a tall ask. There has never been an instance going back to WWII where inflation gets out of hand, and then gets back in line without a recession. However, so far, all the economic data in December supports the soft landing scenario. Corporate earnings have reaccelerated, and economic data remains non-recessionary. Households and businesses still have ample amounts of cash, and the employment market, though softening, still remains above the pre-COVID peak in many metrics. Energy prices are trending sideways, and have yet to breakout in a major way. So, until the data shows otherwise, we expect the market to continue pricing in the soft landing scenario.

I/O Fund Portfolio

We are still positioned defensively and will likely look to spread some of our cash into crypto positions as well some of our equity positions that have the clearest path higher. This will be dependent on whatever broad market count has the highest probability of playing out as we move into 2024.

For those wanting information from the analyst team on how we are positioned going into Q1, then keep an eye out for an invitation for two webinars: a 2023 Year in Review webinar and a Q1 Earnings Kickoff Webinar over the next 1-2 weeks. This is when the team will discuss in more detail how we are positioned in terms of fundamentals.

We are holding a defensive position in cash, and will be looking to our hedge signal to help navigate any coming volatility. As stated last year, we do not believe current prices justify a buy and hold mentality, so continuing to be nimble will be what guides any moves we make into early 2024.

Advanced Micro Devices (AMD)

AMD hit our target of $148, and has now seen a sharp decline. It’s worth pointing out the gap down from this region and vertical drop. This is most likely a 5 wave pattern, which is pointing down. For this reason, I am adding an alternative blue count, which has us starting a larger C wave that would retest the 2022 lows. This is not my primary thesis; however, due to the nature of this drop, I have to risk manage for it.

The blue count has a low likelihood as long as AMD stays above $130. As long as we stay above this region, we can see a local bottom and push higher towards $156. This would be my red count, which has us in the final dip before the final swing higher.

The green count would also see us bottom soon, followed by a push towards $158, and a final push into the $170 range.

Based on the AI trend, and how AMD has been overlooked until recently, we lean toward a variation of the red or green counts. This implies that the 2022 low was a major low, and any continued weakness will likely make a higher low. However, the nature of this larger, higher low must be a large 3-wave pattern. We are not seeing a 3 wave pattern from the $148 region, which needs to be monitored. As stated, above $130 and we do not see the need to de-risk.

Nvidia (NVDA) 

My long-term target for NVDA’s bullish path has been $575-$600 for many months. I’m still holding to this, and my red count has us in the final 5th wave push higher into this target.

The other alternative, which fits better with the current structure, is that we are actually in a 2nd wave retrace, with final targets around $640. This is my green count, and though it fits better with the move off the November low, the $640 target does not fit with the proportions of the larger 5 wave pattern that started in 2022.

How we will know which one is in play will require two things: 1) any remaining weakness must hold $420. Below $420 and both green and red are a risk of not playing out. Below $420 and the odds start favoring my alternative blue count, which has last August as a major top. 2) Then, we will need to see a breakout above $575 – $600 to confirm the green count is in play.

CrowdStrike (CRWD)

CRWD has likely put in a major low in January of this year. This is evident by the developing 5 wave push off of this low. Note the vertical push higher in the back-half of 2023. It is clearly a 3rd wave, and still needs a 4th and 5th to complete.  The question is – are we still in the 3rd wave, which is my green count, or are we starting the larger 4th wave, which is my blue count?

If we break below $225, then we are in the blue count. However, look at the composite index below. It is making a lower low, while price is clearly making a higher low. This supports the green count, for now.  I’ll be looking for a low this week, and push into late January to complete 3. Then we should get one final large swing higher after the 4th wave correction completes.

Bitcoin (BTCUSD)

Until Bitcoin truly goes vertical, there are many ways in which this new bull cycle can be counted. We are likely in one of the final dips worth buying, which is targeting $38,000 – $35,000. However, if we are in the start of a sudden 3rd wave, keep in mind that the nature of 3rd waves is marked with shallow corrections that leave investors behind. So, we will likely start adding in the $40,000 region, and layer in as we go lower, or if we bottom and breakout higher. Also, in order for this scenario to manifest, we have to hold $30,000 – $28,000.

Netflix (NFLX)

Sellers have clearly stepped in at the $480 – $495 region. This marked a double, and now triple top pattern, which does warrant caution. As long as this drop can hold $425, the green count is alive. This suggests that we are in a correction within a larger uptrend pattern. If we can hold $425 and turn back up in a 5 wave pattern, then the overhead target is $537-$577. If we go below $425, then the odds start favoring the red count, which has us starting the larger drop back into the $200s.

Microsoft (MSFT)

*Please refer to my section about MSFT in the Supporting Markets section of this report.

Aehr Test Systems (AEHR)

AEHR's technical pattern has always been a mess. If its earnings report is accepted by the markets, we should hold $20.45 and turn higher. If this happens, then the drop we just went through from its high was only a 3 wave pattern, and supports us pushing to new highs in a final swing higher. This is the green count in the chart, and once we break above $39, the odds will favor this scenario.

However, if we drop below $20.45, then we have a clean 5 waves down from the high, which will be concerning. If what follows is a 3 wave bounce, then we will be setting up for a bigger drop. If this happens, we will likely look to de-risk our Aehr position.

Ethereum (ETHUSD)

We now have three series of 5 wave pattern pointing higher, each followed with 3 wave retraces that made higher lows. If we get the vertical breakout after this correction, it will be quite bullish. We are targeting sub-$2000 for this correction. I do not want to see us go below $1850. If we do, the final support is around $1700, which coincides with the below trendline. These levels have to hold if this bullish count is going to play out.

Marvell (MRVL)

There is nothing clean about MRVL’s chart from a technical angle. We have a series of overlapping moves in both directions, which can be interpreted in many ways. For one, we have a crash set up that is active, and a break below $50 will start building the odds that this is in play. This is the red count in the chart above.  However, if we can instead hold $50, and then breakout above $61.75, then we can see a push into the $80 – $90 region before putting in a larger top, which is outlined by the green count.

Super Micro Computer (SMCI)

SMCI is a confusing chart to map. Ever since topping, we have been in a chop that has frustrated both bulls and bears. From a larger perspective, this is the count that I am tracking. The vertical move higher is a 3rd wave, and the only question to answer is whether we are still in it? If so, we will see a breakout above $329. If not, we will see a breakdown below $235. Until one of these levels breaks, we can continue to chop around with no discernable direction.

Cloudflare (NET)

So far, this drop is not concerning. It looks like a 4th wave in a 5 wave push into our overhead targets. These targets are $95, $98, $104. This is the zone that we would take gains. This drop we are in can go as low as $72 and still be valid. Below $72 and the overhead targets get invalidated, which will suggest a top is already in.

Chainlink (LINKUSD)

I’m starting to think that we are in the minor b wave drop that we have been looking for. The targets here are between $12 – $9. We have to hold $7.7 if the bullish pattern is going to continue. With an alt coin tracing a bullish path like above, it’s wise to take it one step at a time. The next major test will be holding the listed support zones.

Micron (MU)

MU did well after their earnings report with favorable forward growth meteics. Because of this, we began a starter position at 2%. The long-term technicals fit best with being in a large B wave that will likely target $97 – a triple top. How MU reacts here will be very telling. If we turn down in a 5-wave pattern, we may look to de-risk and target lower prices. If we instead breakout over $97, we will add to our position, as it will be suggesting something more bullish is developing.

What’s Next

Please join the I/O Fund as we hold two webinars in early to mid-January. The first will be a 2023 Year in Review and the second will be a Q1 Earnings Kickoff.

Recommended Reading:

• Positions Report – November 2023
• 2023 Chainlink Update: Interoperability for Blockchains, Bullish SWIFT Partnership
• Cloud Earnings Review: Signs of Stabilization
• Micron: AI Offers a Multifaceted Secular Growth Tailwind

For reference to terminology used, please look at technical analysis under our resources section here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.

 Elliott Wave counts are meant to provide context. Each colored count represents the most probable paths given the current price data. 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, so that we can better manage risk.

Broad Market Analysis

The Larger Trend (S&P 500)

In last month’s report, I discussed the importance of holding the 4163 SPX level. This level would be the deciding line between how we approach risk for the rest of the year. My primary view was that the S&P 500 (SPX) would see one more swing higher into early 2024 as long as we held this region. We have broken this level since and found a low, so far, at the 4103 SPX level. This move has altered how I view this market, and also how we plan to manage our portfolio.

Because of this, I am maintaining the two general counts; however, I am shifting my primary count to the Red count, and having the Green count as an alternative.

Red

The bear market that started in January of 2022 is still playing out. In Elliott Wave speak, 2022 was the A wave, 2023 was the B wave, and we are starting the final leg of this secular bear market, called the C wave.  In other words, 2023 was a cyclical bull market within a secular bear market.

C waves are relatively easy to track because they are always 5 wave patterns. Unlike a 3 wave pattern, they tend to follow set parameters, have little room for alternative interpretations and allow for precise targets. This is the good news. The bad news is that the C wave is the most dramatic and emotional part of a correction.

If this is playing out, then we are completing the 1st wave that makes up the larger C wave. What follows the 1st wave is the 2nd wave bounce, which I believe we are in. The 3rd wave drop is where the bulk of the destruction will happen. The fact that the drop off the July top is a 5 wave pattern, this potential is present and risk remains elevated.

As stated last month, I do not see a recession developing in Q3, and still do not today, based on the data. So, any top would mean an “event” would likely pull forward a recession, and therefore a market top. Since then, we have had another international event occur, which the market has used to push below our 4163 critical support, forcing us to alter our primary count.

Green

This is now my alternative scenario. It is still possible, especially after so many FAANGs reported favorable earnings. However, the only difference between the Red and Green count is how high this final bounce will go – the Green targets are anywhere between 300 – 600 SPX points above the Red targets.

 While I do think the odds of SPX reaching a new high has diminished due to the depth of this correction, I do believe the NASDAQ-100 and a handful of FAANGs will still see higher highs, while most stocks and indexes see lower highs (more on this below).  

2023 Uptrend and Top

If we zoom in on the structure of the 2023 cyclical bull market, there are a few visuals worth noting. For one, the depth of this drop has clearly broken through the trend channel that has held this move in place.

Fourth waves can, and sometimes do, break through the trend channel, but they need to reverse back into the channel quickly, which we have just seen. If this is a 4th wave, and it did temporarily break the trend channel, expect the 5th wave to be fast and nearly vertical. The next pullback will tell us more.

Secondly, note the structure of the drop from the July high. It is clearly 5 waves, which has decreased the probabilities in the Green count and increased the probabilities of the Red count. The reason for this is because it builds the case for the C-wave. These patterns are fractal, so a smaller 5 wave pattern builds into the larger. We now have what can be counted as a smaller 5 wave pattern in place, which is concerning.

The Last Bounce

The below image sums up where I think the next move will take us. My primary count is Red, which means we will see another drop then push higher into the 4400 SPX region. If this count is in play, the next drop should hold the below red trend line, or even a little lower towards 4238 SPX, at most. This would be the retest of the trend channel breakout.

If we instead break below it, the odds will increase that the correction that started in July is not over. This is marked in Blue and has us making one more drop towards the 4000 SPX region before completing the larger 1st wave pointing down. If this plays out, the Green count will get removed from the board.

If we are in the Green count, we will not know until we break above 4490 SPX.

In conclusion, I only see one more bounce in the S&P 500. Whether that bounce takes us to the 4400 SPX region or towards the 4700 – 5000 SPX region, will not change the likely outcome – any bounce we see will likely get retraced plus all of the 2023 cyclical bull market in 2024. Each investor will need to determine their own risk tolerance, time horizon, and ability to be nimble if they want to play this developing bounce.

Strong Supporting Markets

NASDAQ-100 (NDX)

While it is questionable whether the S&P 500 will push to new highs in the Green count, I think the odds are quite high that the NASDAQ-100 does. Note how NDX did not break below the trend channel. This was a prolonged and complex 4th wave, but it did not go deep enough to invalidate the larger count, which is pointing towards a 5th wave higher to complete large trend.

Amazon (AMZN)

Unlike many FAANGs, Amazon has, what appears to be, an incomplete pattern. It needs a 5th wave higher to complete the move off the January low. My primary target for this move is $155 – $160. Once Amazon gives us this 5th wave higher, it will be a big warning to the bulls, because it will have a complete pattern. If accurate, this should be followed by a larger drop.

Meta (META)

Meta is another FAANG that appears to have an incomplete uptrend. Note how the correction, so far, appears to be a 3 wave move that overlaps. This is characteristic of a corrective move, and also implies that we should see a 5th wave higher. Meta appears to have the most upside of all the remaining FAANGs.

Microsoft (MSFT)

MSFT is another FAANG that appears to have an incomplete uptrend. I’m showing the monthly chart here so you can see the larger trend in place. Many stocks within other sectors of the market have completed their very large 5 wave pattern off the 2009 low. A few, like MSFT, are behind, and still have one more high before completing this large pattern. My target for MSFT will around $378. Once this final leg is complete, I expect a deep retrace to begin.

The above charts in Big Tech are the clearest that I track. They have higher odds of making that final 5th wave move to new highs. Why this is important is because they can be our guides in better managing risk. Once these charts complete that 5th wave to new highs, the risk will be elevated for the bulls. On the other hand, if they instead fail, we will be able to pivot relatively quickly.

Weak Supporting Markets

Just as the above patterns can be a guide to help determine heightened risk, so can some of the weaker markets. The below markets have the same pattern is place – a large top (B wave), followed by a 5 wave decline from the recent high (early start of the C wave). So, these markets are farther along in their drawdown than the healthier ones above.

Equal Weight S&P 500 (RSP)

RSP proves that the weighting of the same stocks matters a lot. While SPX is a contender for one more high in 2023, RSP failed to break above the February highs. What’s notable is that we have broken through the lower trend line in a 5 wave move. The next bounce, which we are currently in, should be a 3 wave move that hits the above targets on the chart.

Transportation (IYT)

This index has also broken the major trend line in a deep 5 wave move. We should see one minor drop followed by a final push higher. This index, along with many of its constituents, looks quite unhealthy and tends to lead the market.

Regional Banks (KRE)

This index is the cleanest. We have a clear 5 wave drop, followed what looks like the start of the 2nd wave bounce. We will likely see a little more downside before getting that final push higher into our wave 2 targets.

Ark Innovation (ARKK)

Though ARKK has the same 5 wave pattern from the recent high, it isn’t as clean as the above charts. There is the potential for a bigger move higher, which would line up with the SPX Green count. This ETF will help determine where the broader market goes, and the next pullback will tell us a lot. However, even if we do see a bigger move higher, this ETF has topped and it will be years before it sees new highs.

In conclusion, the bifurcation in this market is only growing. While some stocks have incomplete uptrends, suggesting one more high, others have topped and are looking to make another lower low soon. All provide key clues on when this already risky market will approach maximum risk. As stated before, we are already quite defensive and ready to hedge 100% of our portfolio when our signal flips, but we will use the above patterns to help us de-risk even more in the coming weeks.

Macro

We have warned our members all year that the fight against inflation is far from over. The disinflation that we saw was not only historic, but it was driven predominantly by a deep deceleration in energy prices, as noted by the 3-month annualized readings below.

Note how Core Inflation stayed within the 4%-5% range through most of 2022 and 2023. Instead, we saw food and energy decelerate, causing the disinflation that rallied equities into 2023.

As we warned since June, energy was putting in a big bottom, and it should put pressure on inflation numbers. This is exactly what has happened. We have seen the headline CPI numbers bottom well above the FED’s 2% target, followed by 3 months of reacceleration.

What’s concerning is that not only has energy prices reaccelerated, but so have core prices. Even though we believe the FED has paused their rate hike campaign, like in all instances throughout all of modern market history, a recession is needed to truly tame inflationary pressures. I do not believe this time is different.

However, the economy is not in agreement. While we are seeing some soft spots, employment remains relatively strong to claim an imminent recession is underway.

For one, continuing claims for unemployment are staying stable. Once we see a sharp jump here, it is a warning sign. Also, some other key employment metrics that I tracks – Private Sector Quits Index, Employment Cost Index, and Job Openings/Total Unemployment – are all well above the pre-COVID highs. Though they are weakening, they are still quite strong relative to the pre-COVID levels, suggesting that they are not recessionary, yet.

Heightened unemployment is necessary in recessions. Though we are seeing a resilient employment market, it’s worth noting that some of the leading indicators for employment are flashing warnings.

For one, Total hours Worked is trending down and now noticeably bellow the pre-COVID highs. Also, one of the first metrics to drop for employment is temp hours worked. This metric is seeing its fourth month of deceleration to the downside.

So, while the overall employment market is showing resilience, under the hood, we are starting to see cracks form. This further confirms that we are on the clock for a coming recession.

Another point worth mentioning is the relationship between Japan, Oil, and the NASDAQ-100. Next to the NASDAQ-100, the Japanese Nikkei is one of the strongest markets in the world. Interestingly, the Nikkei has been leading the NASDAQ-100 for some time. The below chart shows this phenomenon – the Nikkei is in red while the NASDAQ-100 is in blue. Note how the Nikkei tends to bottom and top before the NASDAQ-100.

The reason for this is academic. What really matters is that the correlation is still intact, as the Nikkei is also working on an incomplete uptrend pattern.

The drop in the Nikkei is quite a mess. Note the overlapping waves with no clear direction. This is typical of 4th waves, and supports that the Nikkei is setting up for that final swing higher.

 Japan also imports all of their oil, which also supports this thesis. If oil prices continue higher, this will compress Japanese margins, and likely cause their stocks to go lower. The current state of oil appears to be in the sharpest part of its current correction. My targets for this drop are around $76 – $70.

If the current drop in oil holds $70, and then starts turning back up, it will also signal that we are close to the end of this push higher in equities. Note how the larger pattern is a 5 wave move off the low, now followed by a 3 wave retrace. This is threatening the return of a large uptrend in oil, as well as many other commodities, which will increase inflationary pressures.

So, how oil reacts around the $70 region will be very important. Though most investors are starting to accept the sticky inflation theme we have been warning about, few are aware that oil is setting up for a potential move to new all-time highs. This needs to be monitored daily for risk management purposes. If oil can push below $70, then this thesis will be negated. This will be very bullish for equities, and potentially be the catalyst for the Green count in SPX

In conclusion, while the market is starting to accept that inflation is stickier than previously thought, few are talking about some of the setups in key commodities, like oil, that have the potential to push to new highs. If this happens, it will catch the market off guard, as most expect a softening economy to lead into a recession, which will pull down commodity prices, and therefore inflation. The implication, if accurate, is a true stagflation environment, which would be the catalyst for the larger C-wave drop to fresh lows. A lot is riding on how oil trades over the coming weeks.

I/O Fund Portfolio

We are currently sitting on about 25% cash. This is very defensive, and if we continue to see the above markets and stocks hit their targets, we will continue to raise cash. The below pie chart is how we are allocating the other 75% of our funds. This represents all funds invested.

Advanced Micro Devices (AMD)

AMD has broken out above the downtrend channel. This further supports the Green count that has the $130 region as a final target before putting in a larger top. AMD is due for a pullback – note how the detrend oscillator is at the same amplitude that saw the 2018 and 2020 tops. Prior tops tend to mark current tops with this oscillator. As long as the pullback holds $93, I expect the $130 target to be met in the coming weeks. Below $93 and this thesis will be threatened in favor of the Red count below.

Nvidia (NVDA)

NVDA appears to be one of the stronger FAANGs, like AMZN, META, MSFT above – it appears to be working through an incomplete uptrend, suggesting a 5th wave higher is needed. What is concerning is that the red count provides that 5th wave higher, which suggests a bigger top is already in. This would support some of the institutional activity in the $440 region, which suggests selling.

As usual, the upcoming earnings report will be paramount to deterring what count is in place for NVDA, and the larger market. As long any further weakness holds $380, the green count is still active. Any move below $340 will fully confirm the top is in.

Microsoft (MSFT)

MSFT is very close to the upper targets we laid out weeks ago. At $378 and we should see a pullback. If that pullback is a 5-wave drop, it will signal a larger top is developing. However, it still needs a higher high to complete that 5th wave. Until we get that, this could play out in many ways. Any imminent drop below $324 will be concerning. Below $307 and the top is in.

Bitcoin (BTCUSD)

Bitcoin’s correlation to tech stocks has completely detached. It is on its own path, which seems to have more of a correlation to global liquidity as well as banking concerns. I’m not sure what the catalyst for this bullish count will be, but so far, it is still valid and playing out. We need to see a fresh vertical move up from here to further confirm this count. If Bitcoin instead gets below $30,000, it will get concerning, and put the below bull path in jeopardy.

CrowdStrike (CRWD)

So far, CRWD is following the bullish count we laid out months ago. It appears to be tracing a leading diagonal pattern for its 1st wave. If true, we still need a 4th wave drop and 5th wave push higher to confirm it. I’m looking for a top soon, followed by a 4th wave pullback to $166 – $150. As long as this pullback hold $147, I’m leaning into the bullish path, which has us targeting $215 before the bigger pullback takes hold.

Netflix (NFLX)

I’m still considering the July high as a bigger top. This doesn’t mean we can retest that level and even push slightly higher in the coming weeks/months. This would be my Green count below. Note how the drop from the July peak was a 3 wave pattern, followed by what looks like another 3 wave bounce. This lines up with the big picture that we are tracking, which is that NFLX is in a large degree 2nd wave retrace. If the next drop is a 5 wave move, it will line up with this thesis. If instead we get a 3 wave retrace, it will support the Green count. So, the next decline in NFLX will be very telling.

Aehr Test Systems (AEHR)

The one thing this drop does have going for it is that we only have a 3-wave drop from the high. If we see a bounce back into the $26-$28 level (4th wave), followed by another drop lower (5th wave), then we have reason to be concerned. If this happens, it would be the larger 1st wave pointing lower, which should be followed by a 2nd wave bounce. This would be used to de-risk. If the Green count has any chance, AEHR needs to get back above $35 and not make another low.

Ethereum (ETHUSD)

The bullish structure in ETHUSD continues to build. I wouldn’t be concerned about Ethereum not breaking out with Bitcoin, yet. It’s due for a slight pullback, which should hold $1635. Below here is concerning. If we do hold this support zone, the next move will need to be a vertical breakout.

Super Micro (SMCI)

SMCI continues to frustrate and confuse. The patterns are messy, and just when I think a have a handle on it, it gets more confusing. What I do know for certain is that the move down from the October high is a clear 5 waves. Either this is all of the C wave of the 4th wave correction (Green), and we are setting up for new highs, or this is the 1st wave of a larger C wave pointing down (Red). The bounce, so far, appears to be corrective, which elevates the risk here. A break below $230 – $222 will confirm the red count. We need to get above $275 to confirm the Green count.

Marvell (MRVL)

Once MRVL broke below the $52 level, the risk became elevated. What’s frustrating about the chart is that we have overlapping waves up and down. The current drop cannot be counted as the start of a larger drop, yet. If we get one more drop towards $46-$44, then we have this confirmation, and the top will likely be in for MRVL. If this happens, the next bounce is where you de-risk. If the Green count has any chance, this has to be a low, and we need to turn back up from here.

CloudFlare (NET)

This Gann chart tells the current story with NET. It’s in a very large resistance zone. The 1×1 line (45 degrees) from the top is around $64-$66. Also, two difference techniques that I use to find support and resistance confirm the same level, and all three of my moving averages are also in this zone. If NET can break above this zone at $66, retest it as support and hold it, I’d consider that quite bullish and would look to add. Instead, if we see a strong reversal here that takes us below the $54, I’d start getting concerned.

Chainlink (LINKUSD)

This is my general roadmap for LINKUSD. We should see some type of top around $14-$18. If the following pullback is a 3 wave move, then that will confirm the blue count presented. We would use that drop to add more to our position. If instead, we see a 5 wave drop from that high, it would be concerning, and we may use that to reduce our exposure. As of now, I see no reason to be pessimistic, as the next drop will tell us everything.

Recommended Reading:

• Positions Report – October 2023
• August Positions Report
• July Positions Report
• POSITIONS REPORT – JUNE, 2023

For reference to terminology used, please look at technical analysis under our resources section here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.here. Regarding the horizontal lines, black lines represent strong support/resistance, while dark red lines mark very strong support/resistance.

Elliott Wave counts are meant to provide context. Each colored count represents the most probable paths given the current price data. 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, so that we can better manage risk.

Broad Market Analysis

The Larger Trend

The below image is a weekly chart of the S&P 500 (SPX). So, each price bar represents one week of price data. The weekly chart provides a great snapshot of the larger trend in play. There are currently two scenarios/counts that I am tracking, as of now.

• Green – This is the primary scenario that I am game-planning for. In this count, we completed a large 5-wave pattern off of the COVID low, which topped in January 2022. This also completes the even larger 5-wave pattern that started on March of 2009, which, if true, would suggest a larger bear market is in play than just the 2022 drop.

  What has followed the 2022 top has been the start of a secular bear market. That would make this year a cyclical bull market within the larger secular bear market. In Elliott Wave speak, 2022 was the (A) wave down, 2023 is the (B) wave up, and 2024 should be the final (C) wave down.

  Where this puts us now is that we should see one more multi-month swing high before the larger (B) wave tops. As long as the current correction that we are in can hold 4163 SPX, I am viewing this volatility as a correction within a larger uptrend.
  

• Red – This count is the alternative/secondary count that I’m tracking. The only difference between this and the green count is when the (B) wave will top. Green says it will top after we see one more swing higher. The red count says July was the (B) wave top and we are in the very early stages of the final (C) wave that is pointing towards 3000 SPX. If we break below 4163 SPX in the coming weeks, I will have no choice but to abandon the above green count, and shift into the red count as my primary.

I’d like to also point out the RSI on the above weekly chart. The RSI is a momentum indicator, and provides excellent clues on the strength or weakness of current trends. Note how the weekly RSI held that red trend line from the COVID low. The green arrows mark bottoms in a bull market.

Then note how that trendline, which was bull market support, became bear market resistance in 2022. We had a brief period where we reclaimed this key trend line, but we are well below that trendline now, which suggests that we are still in a bear market momentum pattern. Furthermore, note how the 2023 uptrend held the black trendline until recently, further supporting internal weakness in the market that is not seen in bull markets.

These are weekly charts, which means that we can still see a push higher. However, I would fully expect any push higher in price will be met with weaker momentum. What this means is that the market is on thin ice, and simply does not have the needed strength to keep pushing higher well into 2024, as of now. If we do hold the 4163 SPX pivot and turn back up for one more push higher, that red trend line will likely be the key resistance for tracking the top.

Cyclical Bull within a Secular Bear

If we zoom in on the 2022 top through today, you can see where I believe we are within this secular bear market. I have the first leg down (A) ending at the June low. This would put the move off of the October low as the C wave within a large (B) wave.

All C waves are 5-wave patterns, and the current structure looks incomplete.  If accurate, the current period of volatility is a 4th wave suggesting a 5th wave push higher to complete the larger structure. This means that the larger trend is still pointing down, and the current “bull market” that we are in is a correction within this larger downtrend.

What would invalidate this scenario is if we drop directly through the 4163 SPX pivot. Below this level and the green count gets too stretched to be valid, which would put us directly into the red count. This would mean that the July top was actually the (B) wave top, and we are in the early stages of the final (C) wave within the secular bear market.

Since C waves are always 5-wave patterns, a drop through the 4165 pivot would suggest that we are in the 1st wave of a larger 5-wave pattern pointing us towards 3000 SPX. This 1st wave would target around 4000 SPX, which would then be followed by a large bounce back to, at least, 4200 SPX. If this plays out, the 2nd wave bounce is the last chance investors have to manage risk.

In conclusion, as long as any additional volatility stays above 4165 SPX, we expect a final swing higher to take us to new 2023 highs in SPX and NDX. Below this level, and the odds of a new high diminish greatly.

Another key point, which is also a warning, is that even though SPX and NDX suggest another high is probable, it’s important for investors to understand that most indexes/markets/stocks appear to have already topped. So, while SPX and NDX could make another high, many stocks will simply make a lower high.

Supporting Markets

NASDAQ-100 (NDX)

The tech-heavy NASDAQ-100 (NDX) appears to need one more drop to complete the current correction we are in. But, unlike the S&P 500, the NASDAQ-100 is in a more bullish posture. This correction, unlike in SPX, has not retraced a significant portion of the large breakout we saw earlier this year, unlike in SPX. So, it has higher probabilities to push to new highs even if the 4163 SPX pivot does not hold. If this plays out, I still view NDX in a larger (B) wave. So, expect us to continue to sell into any further push higher from here.

The Equal-Weighted S&P 500 (RSP)

It is important to track the equal weighted S&P 500 (RSP) vs. the market cap weighted S&P 500 (SPX). An equal weighted index gives the same percentage weighting to Apple as it does, say, Under Armour.  In an expanding and healthy economy, we tend to see mid-caps outperform, as well as expansive growth in all stocks and sectors. So, when RSP is outperforming SPX, it tends to signal a healthy economy.

In the normal S&P 500, which is organized according to a stock’s market cap, the higher the price goes for a stock, the more of a weighting it takes up within the index. This is how you can have an index of 500 stocks being held up by a handful of mega cap stocks, as we are seeing right now.

The below chart compares the S&P 500, equal weighted S&P 500, and the top 7 stocks in S&P 500. As you can see, when you don’t allow for these 7 stocks to take up an outsized portion of the index, you get negative returns for the year, signaling broad weakness in the markets.

If we look at RSP alone, it has just broken the uptrend support that started at the October low. This is usually not a good sign, especially following such a weak and messy uptrend pattern. I believe RSP is leading SPX, and it is only a matter of time before Big Tech follows.

Ark Invest (ARKK)

We have nothing but respect for Ark and their research. The reason I am tracking ARKK is not to pick on them, but because they are a great benchmark for high beta tech, which I believe is also leading the broader market.

The bounce from the January low in 2023 is a perfect corrective pattern. Note how symmetrical it is, as it took the shape of a 3-wave pattern. This suggests that 2023, so far, has been a correction within a larger downtrend.

If accurate, keep in mind, that the larger downtrend is a 5-wave pattern. This means that the final drop will also be a 5-wave pattern. Note what pattern has just developed off the 2023 high. You can clearly see a 5-wave drop that is coming to an end. What this suggests is that the next rally will provide a lower high for ARKK, while SPX and NDX make a higher high. If this happens, it will be a big warning, and further confirm our green scenario.

Small Caps (IWM)

No matter how you count the current structure, IWM will not likely see an all-time-high (ATH) for some time. I have been tracking the structure since the 2022 low. It is definitely a triangle pattern, which only shows up in B waves and in 4th waves.

The question is – what direction is this triangle pointing? If SPX is in the red count, then IWM will likely lead with a sustained break down below $167. If SPX bottoms and begins tracing the green count that I laid out, then I expect IWM to also follow. This would have IWM make one more high in a direct fashion before topping out.

Financials

We’ve continued to warn about something brewing within the larger banks. Some of these charts do not look healthy, and suggest the red count in SPX should not be completely ignored. Below are the charts of two major banks in the US – Citigroup (C) and Bank of America (BAC).

They have both broken the major trend line that has been in place since 2009. These patterns look like 10 – 12 year bear flags. C is on the doorstep of confirming a head and shoulder topping pattern that has taken 3 years to play out.

There’s just no interpretation of the above charts that is not concerning. However, these are large patterns that have taken years to develop. So, they can allow for the green count in SPX to play out before letting go. If SPX and NDX make a new high in the green path, I’d look for these banks to trade sideways or make a muted lower high.

Regional Banks are also pointing lower after providing us with a similar pattern as ARKK. After completing a corrective looking bounce, we got a fresh 5-wave drop from the 2023 high. This is likely the 1st of 5 waves that will take us to the final target for this drop.

Note the divergence in momentum. This means the selling pressure is fading, which is common after completing a 5-wave drop. What should follow is a multi-week to month 2nd wave that will give us another lower high in the coming rally.

In conclusion, we are not seeing the type of breadth and leadership that accompanies a new bull market. Many economically sensitive stocks and sectors have put in a larger top, and are likely leading the broad market lower. However, the patterns in SPX and NDX both can allow for one more large rally to end the year. As long as SPX holds our 4163 pivot, we will be looking for this to play out. This means SPX and NDX will make a fresh high, while many of the other indexes and stocks discussed make a lower high.

Macro – The Two Most Important Markets

Once banks began to fail in Q1 of 2023, we saw a panic into cash and short positions in preparation for the next leg lower. This sentiment only fueled the next leg higher, as April saw its first of many upward surprises in economic growth. This was accompanied with a strong disinflation trend that has surprised to the downside for most of the year.

When we see growth accelerating and inflation decelerating, it creates the type of economic environment where high beta/risk-on investments tend to outperform. This is what we have seen since April through late July of 2023.

However, as early as July, we warned our readers not to celebrate a permanent victory over inflation. With history as our guide, we stated in our July Positions Report, “It is likely inflation starts to surprise to the upside again in the second half of 2023, further supporting the need for continued tightening until the economy enters a recession in Q4/Q1.”

We have been beating the drum each month that inflation will likely return, which could derail a richly valued market that is pricing in a FED pause. In the last CPI report we saw a bottom in inflation and reacceleration of the headline CPI print.

While the market tracks the YoY number, we prefer to track the 3-month annualized reading. The reason for this is because it provides better insight into the actual trend in play. Also, in order for the YoY number to reach the FED’s 2% target, we will need to see several readings at or below the YoY target. So, it is a measure that can help you see the developing trend.

From this perspective, the 3-month annualized CPI print bottomed at 1.9% and has reaccelerated to 3.9%. Though we have seen a nice deceleration in core inflation from its 5% range to 2.4%, this is nowhere near enough to get us to the FED’s 2% YoY target, and it wasn’t enough to offset the move higher in oil.

What we are dealing with now is a return to an uptrend in crude oil prices. After a very long and complex correction, crude oil has given us several higher highs, while reclaiming key levels from the prior downtrend. What’s even more concerning is that we have a very clear 5-wave bounce from the May low. This implies that a new uptrend is underway, which, if accurate, should target new highs.

How this lines up with the green count in SPX, suggesting one more multi-month swing high, is that oil is due for a reasonable pullback in both time and price, which is currently underway. The first 5-wave pattern off the low took ~4 months to complete. I would expect the coming 2nd wave retrace to be about 1.5 – 2.5 months long. This will relieve inflation concerns, rates, and also provide a path higher for equities. 

The other key market to track is the US Dollar. I track the Dollar Index (DXY), which is a basket of currency pairs against the dollar. What is undeniable in this market is the inverse relationship between DXY and US equities.

The reason for this relationship is based on the abundance of global debt denominated in the US dollar. Some estimates claim that $12 Trillion of global debt is denominated in the US Dollar, while others have claimed its even as high as $65 Trillion. This would be debt in US dollars coming from non-US banks and shadow banks. These figures are in relation to a global GDP of $104 Trillion.

Regardless of the actual denomination, with so much global debt priced denominated in dollars, when the dollar goes up in value, compared to a country’s own currency, the cost to service this debt is also going up. This drains liquidity from that foreign economy, which is less money to spend on stocks. Adversely, the opposite is true, which is one of the reasons why we have seen such a sharp increase in US equities. As the dollar has dropped sharply from its high, global liquidity has also bottomed and slowly trended up.

If we analyze DXY, it appears to be in the final stages of the corrective rally within a larger correction. It hit the middle target around $107; however, the structure looks like it can extend towards $108 in the coming days/weeks. It could even extend a bit higher, but the bigger picture has DXY, and the US Dollar, continuing its downtrend once this corrective rally is over, which should be good for US equities.

In conclusion, we believe the body of evidence supports one more push higher in equities that could take us into early 2024. However, in order for this to pan-out, we need oil to pullback along with the US Dollar. This will open up global liquidity while relieving pressure on inflation concerns, and therefore rising rates.

We do not believe the growth data in the US supports a Q3 recession, which lines up with a Q4/Q1 top due to an inevitable recession. With the US growth story remaining resilient, and sentiment approaching extreme bearishness, again, the setup is there for this final swing higher.

I/O Fund Portfolio

We remain in a defensive posture due to the on-going macro risks that have yet to be resolved. We do believe a recession is inevitable, and continue to target Q4-Q1 for this timeline. Until then, we do not see the FED starting a new liquidity cycle, which has been a necessary ingredient for lasting bull markets.

However, the next swing higher, if it manifests, could take us into Q1 of 2024. So, we have been adding to our longs by building a large position in Crowdstrike, starting a new position in Enphase, and adding to existing positions, like AMD.

We do not believe this environment nor these prices are good long-term positions. We also believe the risk is quite high without a nimble exit plan. Our intension is to raise more cash if/when we reach our target for the green count.

Advanced Micro Devices (AMD)

The drop from the June high in AMD looks corrective. In other words, the red count suggests a top in June and the start of a C wave to new lows. However, the structure of this drop does not look like a 5-wave pattern, which we would expect to see in a C wave drop. So, I’m leaning towards a low in our bottoming area, and a push to new 2023 highs, which will complete this pattern. We need to hold the $89 support on any further weakness, or the count that can take us higher is likely over.

Nvidia (NVDA)

There are 3 potential counts I’m tracking with NVDA. The green count has put in a bottom in the 4th wave, and we should see a direct trend towards $545 – $575. The blue count is a variation of the green count, which still should see a push towards $545 – $575. The only difference is the 4th wave decline we are in. This count would have us push towards the $355 level before finding a bottom. The red count would have us break below the $340 critical support zone. If we do this, then the top is in, and we will start developing a new buying plan, targeting much lower levels.

Aehr Test Systems (AEHR)

My confidence in AEHR’s chart is not high. The structure has become so complicated that I went back and re-worked the entire count from scratch. I would like to see AEHR drop and hold around $37. If this happens, I will likely buy. If we break below $37, that’s not a good sign, but it still leaves a path higher. From every count that I can create with the current price data, none can go below $23 and still suggest another push higher. So, that is the critical support level to monitor.

Bitcoin (BTCUSD)

BTCUSD has been stuck since April. With its failure to breakout over $32,000, it keeps the door open that we could push lower to make a new low. As long as we stay above $20,000, I’m leaning towards a continued consolidation with one more push lower, followed by a breakout over $32,000. If we instead breakout over $32,000 directly, then the low is in, and we can shift towards buying the breakouts.

Microsoft (MSFT)

MSFT can make a push lower towards $307 or $301 and still allow for a new 2023 high. There is a lot of support in this region. If MSFT breaks below $293, then the green count will be taken off the board, and the red count will become my primary. Considering how important MSFT is to the market, this would have implications across the board.

Crowdstrike (CRWD)

Unlike many stocks, CRWD has a clear path to go much higher from here. This does not mean that it will take this path, but it is notable that it is present. Most stock that I track do not have a path with this much upside in them. Crowdstrike can suffer a drop as low as $118 and still hold this upside potential. Below this level and we are heading towards $75.

Ethereum (ETHUSD)

ETHUSD has the same setup as BTCUSD.  I’d allow a 2nd wave retrace to $1265, but below this level and the larger breakout setup is in question. The confirmation price for the larger breakout is above $2285.

Netflix (NFLX)

With NFLX going below $382, the odds of a new high, as shown in the green count, are diminishing. It needs to reclaim that trend line and break above $395 very soon to negate the breakdown setup. We took heavy gains at $408 and $448 due to this potential setup playing out. We will continue to trim NFLX on any extended bounce from here.

Marvell (MRVL)

MRVL’s break below $52 has made the possibility of a new 2023 high less likely. I’m not liking this count, and struggling to make sense of what’s next. We like MRVL as an AI play, but we are likely early. If we do sell out of this one, expect us to get back in at lower prices. We will wait to see what kind of bounce we get from here. If we instead go directly below $48, we may stop out.

Supermicro (SMCI)

SMCI went from being the perfect setup to buy, to becoming a mess. My best interpretation has us making another leg lower towards $205-$195 from here. However, this runs counter to what I’m seeing in a lot of other stocks. So, if we do see another leg towards our target, we will buy. On the other hand, if we see a breakout above $305, I’ll consider the low in for a very ugly correction, and we will setup new overhead targets.

Chainlink (LINKUSD)

LINK’s range-bound consolidation has been nothing short of epic. After looking back at various exotic Elliott Wave patterns, I’m convinced that LINK’s consolidation is what’s called a barrier triangle. This is an extended consolidation that stays on a horizontal plane. It is almost always seen as a 4th wave, meaning we should see a final drop towards $3.5 to complete this large degree correction. This is where we will heavily buy. If we do not get that low, for me to consider the low as in, I’ll need to see a break above $11.

Enphase (ENPH)

Enphase has gotten hammered this year, moving in the exact opposite direction of big tech. We are seeing signs of selling exhaustion while we approach the final parts of this very large corrective pattern. I’m expecting a bounce soon, which should take us to $145, at minimum.

Taiwan Semiconductor (TSM)

TSM has topped. After giving us a complete 3-waves up off its low, it has broken the trend channel in an obvious 5-wave pattern pointing down. We will look to close it on the next larger bounce.

Recommended Reading:

• AEHR Fiscal Q1 Pre-Earnings: Rapid Growth Up Ahead
• Palo Alto Networks: “Firmly” GAAP Profitable
• Enphase: Price is Low for a Global Solar Leader
• CrowdStrike: Steady Growth, Strong Bottom Line
• August Positions Report