Nasdaq 100: Assessing the Bull Market's Structural Integrity

The Nasdaq 100's recent action has thrown the bullish narrative into sharp relief. After peaking at 25,835 on December 10, the index failed to reach the expected 26,500 ± 250 target zone. Instead, it broke below multiple short-term warning levels, sliding to around 24,780. This breakdown from a key technical target frames the central question: is this a healthy consolidation within a larger uptrend, or the start of a more significant bear market?

Two competing Elliott Wave interpretations now dominate the analysis. The primary bullish view sees the decline as a corrective W-ii wave within a larger pattern. Under this scenario, the market is in the 5th wave of the red W-c of the black W-3. The critical support level is the November 21 low at 23,854. If that level holds, the bull market could continue, potentially setting up a final wave to target 28,000+ by approximately April 18-28, 2026. This view is supported by the Advance/Decline line, which made a new high, suggesting underlying breadth remains intact and a bear market is not yet developing.

The bearish alternative, however, interprets the peak as the start of a larger 5th wave down. In this scenario, the November 21 low at 23,854 is the critical inflection point. A break below that level would strongly suggest that the bear market is already underway, invalidating the bullish wave count. The failure to make a new all-time high and the subsequent breakdown below warning levels like 24,542 and 24,214 are early warning signs in this context.

The bottom line is that the market is at a structural fork. The current price action-a failure to reach a key target followed by a breakdown-creates uncertainty. The path forward hinges on the battle for the 23,854 level. A hold suggests a corrective pause within a longer bull market, while a break below signals a potential shift to a bearish trend. For now, the wave structure is in flux, and the market's next major move will provide the answer.

The Bull Market's Supporting Evidence

Despite the recent pullback in the Nasdaq 100, a set of fundamental and technical indicators suggests the broader bull market may still be intact. The most compelling signal is the behavior of the Advance/Declining line, which made a new all-time high. This divergence from the index's price action is a classic sign of underlying market health, as it indicates that more stocks are participating in the rally than just the largest names. A developing bear market typically shows negative divergences, where prices make new highs but the AD line fails to follow. The fact that the AD line has broken higher contradicts a broad-based downturn.

Technically, the intermediate-term trend remains positive. The index is still trading above key moving averages, including the 50-day moving average at 25,393 and the 200-day moving average at 25,231. These levels act as dynamic support and reinforce the bullish structure. The primary bullish scenario hinges on the index holding a critical floor. The analysis identifies the November 21 low at 23,854 as the key level. A decisive break below this point would signal a bear market is underway. As long as it holds, the path for a new rally remains open.

The projection for that rally is ambitious and timed by historical patterns. If the November low is respected, the bull market could continue into next year, with a potential target of 28,000+ by approximately April 18-28, 2026. This timing aligns with historical midterm election-year seasonality, which often sees a peak around April. The forecast is supported by cyclical models, like the Armstrong Pi-cycle, which has correctly identified major turning points in the past, including the 2022 bear market peak.

The bottom line is that while the Nasdaq 100 has failed to reach its earlier wave target, the supporting evidence for a continued bull market is still present. The new all-time high on the Advance/Declining line and the intact moving average structure provide a foundation. The market's fate now turns on whether it can defend the 23,854 support level. A hold sets up a potential final surge toward 28,000, while a break below would signal a more significant shift in trend.

Catalysts, Risks, and Forward Scenarios

The Nasdaq 100's recent exhaustion sets the stage for a decisive test. The index has retreated from its autumn peaks, currently trading around 25,644, and failed to break key resistance near 26,180. This technical failure, following a "hawkish surprise" from the Federal Reserve in mid-December, has triggered a wave of profit-taking and year-end tax-loss harvesting. The immediate forward scenario hinges on two critical factors: the strength of any seasonal rally and the market's reaction to a persistent policy risk.

The most critical level to watch is the November 21 low of 23,854. A decisive break below this point would signal that a more significant downturn, possibly a new bear market, is underway. For now, the Advance/Declining line remains at a new all-time high, which suggests the broader market is not yet in a bearish divergence. If this support holds, the path for a rebound remains open, with some models projecting a potential rally into next year targeting 28,000+ by late April 2026.

The primary near-term catalyst is the potential for a Santa Claus rally in December. Historically, this seasonal pattern sees money managers buying to improve year-end performance. However, its strength is muted this year. The market has already "exploded to the upside for several months", leaving fewer buyers to push prices higher. Any rally is likely to be more muted than in typical years, and its success will depend on the Fed's dovish stance holding firm.

The major forward-looking risk is the Federal Reserve's projected "higher-for-longer" rate policy. The central bank's signal of only one additional cut for 2026, citing sticky inflation near 3.1%, immediately pressured high-multiple tech valuations. This policy reality creates a fundamental headwind for the Nasdaq's growth-heavy composition, making the sustainability of its current rally a key question for 2026.

The bottom line is a market at a crossroads. The critical support at 23,854 must hold to preserve the bullish structure. Any move toward it should be treated as a risk management signal. The path forward depends on whether seasonal buying can overcome the weight of a hawkish Fed and year-end profit-taking, or if the market's exhaustion is the start of a deeper correction.