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NASDAQ and S&P – a warning for investors

Since the beginning of 2009, when all major US indices bottomed, the S&P 500 and Dow Jones have been trending to new record highs. Dow Jones, NASDAQ and S&P 500 have been recovering in corrective fashion. In this article we are going to take a look at NASDAQ 100 and S&P 500, order to see if we have reasons to worry.


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We are detecting a possible top or a short-term correction to the downside. Both indices – NASDAQ and S&P 500 – can be counted as a completed double zig-zag, which is a corrective pattern. In other words, this 5-year recovery, should be considered a fake one so far. The Elliott Wave Theory gives us only possible scenarios not a crystal ball in our hand, so this can be a warning sign for all investors, that the upside potential could be limited and a major top can be expected in the near future.

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On the daily chart of NASDAQ 100 there is a pattern called a leading diagonal, indicating the start of a downtrend. Only time will tell if the down-movement will accelerate in impulsive fashion, starting a long-term downtrend or just a classic corrective move in three waves.


On the other hand the S&P 500 has formed an ending diagonal, which has broken its lower trend line, signalizing for a down-movement and as we previously said only time will tell if this move will continue lower to a new long-forgotten lows.
In conclusion, we think that the upside potential is limited and it is only a matter of time for the new deflationary era to mark its start. Many sociological, economical, political and other indicators are confirming that we are approaching a multi-decade top. For more info check our Socionomics section!

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