Nasdaq: Down But Not Out

Technicals | Feb 24 2021

Bottom Line 23/02/21

Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Up

Technical Discussion

Reasons to remain secular bullish bigger picture:
→ technology sector continues to be a secular growth story regardless of recent outcomes
→ inflationary pressures remain subdued yet under watch
→ Elliott Wave count remains bullish longer term

So I guess what we are saying is that we would like to see a breather take shape, and sooner rather than later. Breathers are healthy for trends to be able to sustain. ‘

The above from our last review continues to see the potential for some form of breather to take hold. Whether that time is now remains to be seen, yet last night’s gap lower did reflect a pretty weak session for the tech sector. Admittedly its been running pretty hot for a while now, so some cooling down would certainly be healthy as stated.

There is scope that the immediate run higher has unfolded as a minor degree 5-wave move. If that is the case then an intermediate Wave-1 may have completed at the recent 14175 highs. On the flip side though the recent dip could just as easily lock in yet another higher high and higher low, which will simply keep the ongoing bullish routine in play.

Worth noting is that the bullish divergence that has been hanging around for months has now dissipated. With only a small amount of further weakness needed to take our divergence indicator fully back to oversold. Which hasn’t been witnessed since late October 2020. Bigger picture though if this is a higher degree Wave-(3) in motion, whether it subdivides into a 5-wave pattern within itself or not, we still have some hefty upside targets on the table here. With equality coming in at 16274, and the 1.618 x Wave-(1) extension projecting 19637. Watching it closely.

Trading Strategy

Our tech trades are looking a little weak at the moment. We were stopped out of Apple Inc last night for a small profit yet Amazon as reviewed tonight is looking a little precarious. As for the Nasdaq, if we do witness a clear cut intermediate Wave-2 unfold from here that proves to be well supported, then the timing might finally be right for us to look at getting involved on the long side from lower. It’s been added to our watch-list to keep an eye on.

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