In the four-hour time frame, the wave pattern of the NASDAQ-100 index looks very convincing. It can be recalled that the main thing in any pattern is not how much one formed each wave and makes it into smaller sub-waves, but how clear and understandable the pattern is. It is worth noting that the most common and understandable wave formations look like five waves up, three down or vice versa. It is these wave structures that should be looked for and developed. Now, the NASDAQ-100 index markets have built five waves up, and two down. Therefore, I expect the construction of the expected wave c with targets located near the 50.0% and 61.8% Fibonacci levels. An unsuccessful attempt to break through the first or second level will indicate that the markets are not ready for further sales of company shares included in the NASDAQ-100 index. So far, everything is inclined to the fact that the formation of an upward trend section will resume after three waves of downward correction, or the index will move in three-wave, corrective structures for some time.
On Monday, the leading US stock indexes closed lower. The Dow Jones declined by 0.1%, the S&P 500 by 1.04%, and the NASDAQ-100 was immediately down by 2.55%. According to media reports, the markets have started to trade on the stocks of companies that can show the greatest growth during the recovery of the US economy. During the pandemic in the United States (as well as around the world), some industries were hit harder, while others were weaker. It is logical that some companies suffered greater losses than others, and the shares of some companies plummeted in price more than the shares of others.
For example, tech companies such as Tesla, Apple or Microsoft continued to rise in price even during the crisis. The same cannot be said about companies that are engaged in transportation or are heavily dependent on tourism. Therefore, it is from the latter companies that the greatest growth is currently expected, since they should show the greatest recovery after a strong decline. Consequently, their shares will rise in value. On the contrary, the shares of high-tech companies, which have been actively growing throughout the previous year and even more, are not in demand now, since they are considered to have already significantly increased in price. It is still possible for Tesla shares to continue to rise in the long-term, but they have grown in value 10 times in the last 12-15 months alone. It is clear to anyone that this is such an unusual growth, which does not reflect the real results of the company or the scale of its development. The same can be said for stocks in Apple and other huge tech companies, whose growth was completely inappropriate amid the global crisis.
But as the US government heavily stimulated the economy with monetary aid packages, very large amounts began to be pumped into the cryptocurrency and stock markets. This explains the growth of each of these markets in the last year and a half.
Based on the analysis, at least one more downward wave C is expected to be formed right now. Therefore, it is suggested to sell the #NDX instrument with targets located near the calculated levels of 13144 and 12923 for each MACD downward signal. So far, the current wave structure does not require any adjustments and has no alternative options.
