10:55AM ET - NASDAQ Bottom Readings and huge reversal
The NASDAQ appears to be carving out a technically meaningful low after reaching deeply oversold conditions that historically align with tradable bottoms. Yesterday’s decline pushed the daily RSI down to the 30 level, a classic threshold that often signals seller exhaustion. At the same time, the VIX spiked to 23, which is not a full panic reading but has repeatedly marked intermediate lows during corrective phases in this bull cycle. That combination—momentum washed out alongside a volatility spike into the low-20s—creates the type of sentiment reset that Elliott Wave traders look for at the end of a C wave.
From a structural standpoint, the move off the lows is not behaving like a weak bounce. The rally has already extended well beyond the typical .382 retracement level for a fourth wave and is now approaching the .618 retracement of the entire preceding C wave decline. That depth matters. Shallow fourth waves tend to stall quickly and resolve into another impulsive leg down, but when price reclaims more than half of the prior decline, it strongly suggests that the corrective sequence has completed and that a larger trend resumption is underway.
Momentum confirmation is also improving. RSI rebounding from 30 and pushing into the mid-40s and higher shows that buyers are regaining control without immediately becoming overbought. This is the ideal profile for the early stages of a Wave 1 or Wave A higher, where the market transitions from capitulation to accumulation. Volume patterns have also shifted, with higher participation on up days than on the final leg down, another hallmark of a completed corrective structure.
The key question now is whether this move is a Wave 4 within a larger bearish sequence or the start of a new impulsive advance. The depth of the retracement argues against a simple fourth wave. By pushing toward the .618 level of the entire C wave, price is overlapping territory that would normally cap a counter-trend rally. Sustained acceptance above the .50 retracement already weakens the bearish count, and a clean break through .618 would significantly increase the probability that the low marked the end of the correction rather than a pause within it.
Volatility behavior supports this bullish interpretation. The VIX has begun to roll over after tagging 23, indicating that hedging demand is fading as price rises. In prior declines during this cycle, durable lows formed when the VIX peaked in the 22–25 zone and then trended lower while equities advanced. A continued drift in the VIX toward the high teens would provide tailwind for a trend continuation higher.
Key resistance now sits near the origin of the last impulsive leg down. A decisive break above that level would confirm a higher high on the daily timeframe and validate the bullish wave count. On the downside, the prior low becomes critical support; as long as that level holds, the current structure can be viewed as the first leg of a new impulsive sequence rather than a corrective bounce.
In summary, the confluence of a 30 RSI washout, a VIX spike to 23, and a rally that has already retraced close to .618 of the C wave gives this move the characteristics of a legitimate trend reversal rather than a temporary relief rally. If momentum continues to build and volatility compresses, the NASDAQ is likely transitioning out of correction and into the early stages of a new impulsive advance.