While the SPX/DOW have appeared to progress in a clear extending Primary wave five, the Techs have been a bit perplexing at times. It all started in the spring of 2006, when the NDX seemed to end in a fifth wave failure while the SPX/DOW/NAZ all made new highs. This failure led to the major selloff into July of last year. Then the NDX again threw in a twist at the end of 2006. While the SPX/DOW continued to uptrend, the NDX pulled the NAZ lower into an irregular minor correction. Then in March, it abruptly took off to the upside and kept rising into last weeks highs, while the SPX/DOW were trying to correct in June. Now that the SPX/DOW are in an OEW confirmed correction, we took another look at the NDX/NAZ in an attempt to understand how they fit into this supposed significant correction. While maintaining the current count on the NAZ for reference, Bill S. and I have discovered a count that would explain the behaviour in the NDX for the past year.
Going back to the Major wave 2 low in April 2005, when all the four major indices were in perfect alignment. The NDX rallied in five waves with the others. After a correction into October, it rallied again into its January 2007 high. While the SPX/DOW/NAZ made a small correction into February, the NDX lagged behind. It finally bottomed in March, and reversed in an uptrend. While the SPX/DOW/NAZ were making new highs, the NDX failed to do the same, and started heading down into a correction, taking the NAZ with it. The SPX/DOW were soon to follow after they topped a week or so later. The actual high in January can be counted as an irregular B wave, since it was totally retraced as the NDX corrected deep into even the first uptrend from the Major wave 2 low. The market stabilzed at that point and the SPX/DOW led the entire market out of that correction. Then the next anomaly occurred. While the SPX/DOW kept uptrending into February of this year. The NDX/NAZ took a detour at their November 2006 high, corrected into December, and then made a choppy rally into February, while the SPX/DOW completed their uptrends. This rally again was totally retraced while the entire market corrected into the recent March lows. Then the entire market surged into the recent highs.
What all this activity suggests is that the NDX actually completed its Intermediate wave 1 rally off the Major wave 2 low. Then rallied with the rest of the market in an iregular Minor B wave, before dropping hard to complete Intermediate wave 2 in July 2006. The subsequent rally into November was actually Intermediate wave 3, and the small irregular correction, Intermediate wave 4. Under this scenario, the recent uptrend highs would also end a potential Major wave 3 in the NDX/NAZ. And, the entire market is again aligned. Bill S. analyzed the waves of this count, finding that Intermediate waves 1 and 5 were equal, and Intermediate wave 3 was 1.618% larger than wave 1. Interestly enough, Intermediate waves 1 and 5 of the SPX were also equal. For the time being we are going to observe both the current count , and this proposed "one wave market" count. Allowing the market the opportunity to clear this interesting relationship.