There is a major Bearish Divergence occurring between the NASDAQ 100's price trend and the trend of its 10 day average Advance/Decline line, warning of a significant decline once this topping pattern completes. We believe the topping pattern is ending a 39 month rally from October 2002 that was merely a correction up of a major decline that started in 2000. The decline from 2000 is taking shape as a down-up-down move, correcting the incredibly long and powerful Bull market from 1971 through 2000. The down move from 2000 to 2002 was the "(A)" down move. The rally since is the "(B)" up move. Coming next - and probably starting in the next few months is the "(C)" down wave.

The Elliott Wave Long-term Big Picture in the NASDAQ Composite 1978 to 2006

If you've been trying to get your bearings on the long-term picture for the NASDAQ, here's an annotated chart of the Composite index, which is similar to the NASDAQ 100. The NASDAQ began trading on February 8th, 1971. The 29 year rally to the NASDAQ Composite's March 10th, 2000 top at 5,132.52 (March 24th, 2000 at 4,816.35 for the NASDAQ 100) completed Cycle degree wave I up, and since has been the start of a primary degree wave (A)-down, (B)-up, and (C)-down. The Composite's (A) down completed on October 10th, 2002 at 1,108.49. Primary degree wave (B) up is nearing completion now. Next is a nasty primary degree wave (C) down to complete Cycle degree II down.

The next chart of the NASDAQ 100 shows that prices have risen to the top boundary of the Intermediate- term Rising Bearish Wedge pattern. The NASDAQ 100 finished up Micro degree wave c of Minuette c up, of Minor degree wave c up, with waves d down and e up left. The alternate count suggests the NDX is completing the final wave c of c of e to a major primary degree wave (B) top. We give this alternate labeling a near equal weighting to the top count. We will lift it to our top count if the next decline generates a "sell" signal from both our key trend-finder indicators.

The top chart on the next page shows a five-wave small degree impulse rally completed with a small Rising Bearish Wedge. That is either a completed Micro degree wave c, or is the first wave {a} of a three-wave {a}-up, {b}-down, {c}-up of Micro c. Once this pattern finishes, the third leg of the corrective Bear market that started in March of 2000 will begin, primary degree wave (C).

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