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ELLIOT COUNT SUGGESTS A FIFTH WAVE HIGHER

Chip Anderson

Chip Anderson

President, StockCharts.com

There are two distinct advances and two declines on the weekly Nasdaq Composite chart with the fifth wave still to come.

The first advance started in October 2002 and ended in December 2002 to form Wave 1. The second advance from 1253 to 2154 is clearly the longest in both duration and price appreciation, which is typical for a Wave 3 move.

The first decline extended from December 2002 to March 2003 and formed Wave 2. The second decline extended from 2154 to 1865 and retraced 23.6-38.2% of the Wave 3. This is a bit shallow, but the pattern looks like a falling flag and quite similar to the Wave 1 decline.

The falling flag is a bullish continuation pattern and a move above the upper trendline and prior high (2080) would signal a continuation higher. A breakout would project further strength to 2209 at a minimum and 2423 at a maximum. This target zone is based on Wave 5 being 38.2-61.8% of Wave 3.

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More