NAZ 100 Target MADE And Wolfe Wave Example

(Click On Charts To Enlarge)

From April 18:

"Chart #2: The NAZ 100 already has broken out of a Bullish Falling Wedge with a nested Symmetrical Triangle (green), which put 1954.99 IN PLAY, very near a 50% Retracement of the decline from last autumn."

The 1954.99 target officially MADE on May 1 this week, and then some. Friday's high was 1996.52, just below the top of the Bear Flag/Rising Wedge, which came in at 2000.52 on Friday. The slope of that trendline is 9.59, so we add that amount each day. It will come in on Monday, May 5, at 2010.11.

The bottom of the Flag was broken on a closing basis, on Wednesday, April 30, but that breakdown got reversed immediately at the open on May 1, after the Fed rate cut was digested by the market. The high on Wednesday was 1953.59, just a hair below our target of 1954.99, so anyone who shorted the rate cut on Wednesday likely used that high as a stop to "buy to cover" on Thursday's short squeeze, knocking out those stops. That, in part, accounted for the nice, big white candle on Thursday, back to the top of the flag. Friday's candle is a Bearish Hangman at the top of the flag, so we'll see if we get any selloff from that.

I threw in Chart #2 to go along with our recent discussion on Wolfe Waves, to reinforce the important elements. Notice that after the Wave 5 upside fakeout on Halloween, putting the proverbial "everyone" wrong-footed (it was a "trick," not a "treat"), the index went back inside the pattern, stumbled around, and then failed right at trendline resistance, on November 7. Right there is a nice place to short it, or short the takeout of the lows of the two prior days, roughly 2179-2181. Notice also how swift the move down to the target line at #6 was (only two days), and how the target was exceeded on the four day smackdown. That's an over-reaction to the trade being overcrowded on the wrong side at the Wave 5 fakeout.