It’s been a while since our last look at the big picture in NDX.  I’ve focused more on broader indices such as SPX, RUT and NYA.   And, NDX has been subject to excesses, thanks to the impact its largest component — AAPL — has on its performance.

But, over the past several months, it’s been one of the more predictable indices.  In our Apr 1 forecast, I wrote that its small rising wedge had run out of steam and it was due to reverse and test the lower bound of its larger wedge.

In the May 1 update, I put a number (2438) on the downside target, revising it on May 8 2446 to reflect the just-completed H&S pattern.  Sure enough, on June 4 it bottomed at 2443.92 to tag the lower bound of the big wedge.

Since then, NDX has reached the Fibonacci .786 of one pattern and the .886 of another.  Is this another important turning point?

continued…

Studying the chart below, it’s clear we have two choices of a starting point for the harmonic pattern since the last top.  We’ve retraced 78.6% of the 2795 to 2443 drop, completing a well-defined Gartley pattern (in purple.)  We’ve also retraced 88.6% of the 2755 to 2443 drop (in red), completing a well-defined Bat pattern.  Each offers a .618 Point B.

It’s also apparent we’ve tagged the upper bound of the red channel that’s guided the upside since 2443 — not to mention two addition channel lines that are parallel to previous channels (white and purple.)

What would a turn here mean for the longer term?  In that April post, I pointed out the possibility that the trip down to the rising wedge’s lower bound might set the stage for a run higher to 2993.

This represents the 1.618 of a large Crab Pattern (in red) that ranges from Oct 2007 to Nov 2008, and within spitting distance of the 1.618’s of the above-referenced more recent patterns (2950 and 3012.)  It’s within 112 points of the 3106 target for the inverse H&S pattern completed in Oct 2010.

Coincidentally, that price level intersects with the upper bound of the big rising wedge in November/December of 2012 — in keeping with my belief that TPTB will find a way to engineer an equities peak going into the US elections.

For all their belly-aching about the Obama administration, Wall Street (and investors in general) have done well by Barrack and friends; a new stock market high would reinforce the wisdom of dancing with the one who brought them.

And, last, a Nov/Dec peak around 3000 would represent the .886 of the rising wedge in both time and price.

To get there won’t be a piece of cake, though.  We still have to make it up through the fan line connecting the October 2007 high with the Apr 3 high.  It’s currently about 2740.  Like SPX, that presents a tempting target for NDX right here and now; there’s a chance we’ll test it before turning down.

But, if not, look for resistance at that level during NDX’s next attempt to push higher.  The apex of the rising wedge is right at the .618 of the drop from March 2000 to Oct 2002.

The immediate test, however, is the next downturn.  If the rising wedge holds, the next low should come in around 2620-2630.

Stay tuned.