Spotting the Nasdaq 100 Top Before a 12% Decline

By Elliott Wave International

On June 3, the Nasdaq 100 was at a record high.

But Robert Kelley, editor of Elliott Wave International’s U.S. Intraday Stocks Pro Service, saw reason to be cautious. The index was tracing out an expanding ending diagonal — an uncommon Elliott wave pattern that can signal an advance is nearing exhaustion.

Here’s what Kelley told subscribers that day:

“All right, so there’s the Nasdaq. It did make a slight new high, making this a reasonably conforming ending diagonal. We didn’t quite get to the five is longer than three count, but in my book, that’s not really a big deal, not really required. I don’t think Elliott himself ever dictated that requirement.

“But so far, the drop isn’t looking too impulsive… but the count shows it could be done.”

He then gave subscribers two levels to watch:

“That’s a big support level there, 30,318, roughly. So if that can give way, it’s in good shape to go lower. And this last rebound high, I think probably should contain any recovery, 30,694.75.”

What Happened Next:

The Nasdaq 100 turned lower. By the end of July, it had fallen roughly 12% from its June high.

The important point isn’t simply that the market fell. At the high, while the prevailing trend was still up, the wave pattern gave Kelley reason to watch for a reversal — along with specific price levels that would help confirm or challenge that outlook.

That’s what EWI’s Pro Services are built to provide: ongoing Elliott wave analysis, key levels and potential turning points across the markets you follow.

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This article was syndicated by Elliott Wave International and was originally published under the headline Pro Services Spotted the Nasdaq 100 Top Before a 12% Decline. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.