NDX is approaching the February low.

As discussed in weekly update on April 6, this area is twofold critical since it coincides with the 10 mma.

If this support does not hold we can see that, in the monthly time frame, there is not a clear obstacle that could prevent a drop towards the next major support zone located at the Trend Line support in force since the 2009 lows and the 0.5 retracement of the up leg from the November 2012 higher low. We are talking about a 10% decline.

Undoubtedly such an outcome would seriously jeopardize the SPX short-term bullish scenario of a potential pending last up leg to a new ATH, which would conclude with a Double Zig Zag or a Triple Zig Zag the 5 years advance from the March 2009 low.

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Before analysing the Elliott Wave pattern lets review some technical indicators because in my opinion we are getting close to extreme readings that usually should favour an oversold bounce and even the resumption of the intermediate up trend with one more and probably the last new ATH which should conclude the corrective rally from the 2009 lows.

•  CPCE is at an extreme high reading (Contrarian Indicator). Though this indicator is useful only for the immediate time frame (One day time frame)

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Reason: Potential Inverted Head & Shoulder with theoretical target at 33

In the daily chart below we can see that price has formed a likely IHS, although the right shoulder would look  better if price “works” sideways  a bit more before breaking out.

The positive divergence and the bullish cross of the MACD (In addition to the histogram above the zero line) are favouring a break out of the sideways pattern developed since the beginning of March

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