Has the NDX topped?
With the strong downside and weekly bar reversal, there is a strong suggestion that the NDX has potentially put in a meaningful peak. I can make the case, not only has it ended the advance from the April 2018 lows, its also possible to suggest its completed an impulse wave from the 2016 lows as well. So thats a very bearish setup. More weakness is needed and follow through next week, but if the recent peak has ended a larger impulse wave from the 2016 lows, then a significant decline is likely underway.
Initial targets are a move back towards the April lows around 6500 – 6300. Based on the way it declines will help decide if a larger breakdown is also going to be seen. The current idea would be negated if a move back above the recent high made last week. A small 5 wave decline on a 30-60 min time frame would further offer strong evidence of a major trend in change.
Readers may have noticed that the SPX failed to confirm the NDX advance and move to a new all-time high. Looking at the history of the SPX over the last 18 years, I noticed that the SPX has made very deep retracements towards the 88.6% a few times before its continued lower, most noticeably in the years 2000 & 2015.
If the current advance follows a similar path to that of the years 2000, 2011 & 2015, then we can expect to see a decline next week and more follow through to the downside, which would also align nicely with the NDX and other tech indexes moving lower.
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