mathias onischka'a ndx outlook...thanks culmus
NDX: Outlook 2007
1. Review yearly outlook 2006
For 2006 during the first quarter gains were expected. The NDX should rise up to 1.750 points and reach the yearly top there. Afterwards a medium-term downside correction to 1.480+ was scheduled. There the NDX was to turn up again.
The real development came close. Early in the year there was a medium-term top at 1.760. Losses to 1.447 points followed by July, so a little lower than expected (1.480). In the second half of the year the NDX went up again, reaching new tops in the meanwhile.
2. Long-term chart technicals
Due to the long-term correlation with the Nasdaq Composite a long-term projection is still tied to this index. Concerning the basic, long-term assessment also this time no change is necessary. The top early 2000 continues to be counted as endpoint of wave III. The downmove till 2002 belongs to the big wave IV. Long-term, over the next 10 years and more, there is a high probability that the NDX reaches and surpasses the old highs.
However, it can still be doubted that the rise of the past 5 years already is part of that bull wave. Though the trend and its dynamics point in that direction, the price patterns of the past years are clearly corrective. With that the scenario of a wave /B/ shown in the following chart of 2004 (unchanged) is still valid, which leads to gains for the COMPQ to around 2.600 points. Similarly the NDX would have even more upside in percentage terms to around 2.100 points.
However, the chart should not be wrongfully interpreted in such a way that an immediate top would be imminent. In the long-term context this wave /B/ can easily extend until the end of 2007.
Three to four years out though, the index rather is in the upper fourth quarter of the expected trading range. The downside wave to under 800 points shown in the chart should be developed, though a significantly slower and shorter downmove is meanwhile more likely.
Chart 1: Monthly COMPQ (unchanged from summer 2004)
wallstreet-online.de
3. Medium-term chart technicals
The second chart, known to the regular reader of the weekly analysis, shows the mentioned corrective character since 2002. That is true especially for the period from early 2004 to mid 2006. The used wave count labels this sideways move as big wave /B/, so that since an impulse wave /C/ is developed.
The technical alternative, which remains in the game, is a double-zigzag-variation. The main difference is in the downside target after the top in the first half of 2007.
This coming top is given as soon as the upside impulse since the July low is complete. Short-term a lot speaks for another upside wave on the long side. Gains to 1.910 are possible and realistic. Assuming similar trend dynamics as during the past months, this top should be reached between the end of February and the end of April.
Particularly for the third and fourth quarters of 2007 this wave count implies falling prices. Here the two scenarios mentioned differ. While in the first case already at 1.650+ a low is reached, the favoured scenario reaches prices of at least 1.600 points. At that point there will be a counter move, but no trend change.
Chart 2: Weekly NDX chart
wallstreet-online.de
A somewhat confusing picture is painted by other Nasdaq Indexes, as they mostly show medium-term bullish patterns. As an example the Nasdaq Composite Telecom Index ($IXTC) is mentioned, which builds a bullish triangle within wave (4). As a break-out to the upside has not yet occurred, of course a negative triangle can still develop. However, in doubt the chart technicals are bullish.
Chart 3: Weekly IXTC chart
wallstreet-online.de
4. Short-term chart technicals
For a complete representation the daily and 90-minute charts follow. The wave count should be known, so that no long discussion is necessary. Further the wave structures are well visible in the daily chart. Accordingly the NDX currently is in correction wave 4, which ideally is completed at 1.733 in early January 2007.
Chart 4: Daily NDX chart
wallstreet-online.de
Chart 5: 90-minute NDX chart
wallstreet-online.de
5. Yearly prognosis for the NDX
Ideally in February there will be the yearly top. The projection target is at 1.845, with an extension to 1.910 not being ruled out. Particularly during spring and the summer months the index should meaningfully lose ground. As it is a correction wave trend dynamics will be lower as during the past rise. The primary target is at 1.650 or 1.605. There the yearly low is reached, so that the NDX will rebound from that intermediate low during the fourth quarter. Should the correction (and the preceding top) develop faster, a rise is possible already from mid year onwards. |
