The Nasdaq 100 at a Pivotal Elliott Wave Juncture: Is This the Final Leg Before a Major Correction?

The Nasdaq 100 (NDX) stands at a critical crossroads in its Elliott Wave trajectory, with technical indicators and market sentiment offering a nuanced picture of potential outcomes. While bullish patterns suggest the index could extend its rally toward 27,225 or even 27,860, bearish signals and contrarian sentiment raise questions about the durability of this momentum. This analysis synthesizes technical and sentiment data to assess whether the NDX is nearing a climax or a correction.

Elliott Wave Dynamics: A Bullish Blueprint with Caveats

According to a report by , the NDX is currently in the third leg of a larger third wave (orange W-3 of gray W-iii), following a successful hold of the November 2025 low at 23,854. Analysts project a target of 26,825 for orange W-3, followed by a pullback to 26,155 for orange W-4 and a final surge to 27,225 for green W-5. If the pattern evolves into an overlapping ending diagonal, the index could test 27,860.

Complementing this, Pi-based cycle analysis from suggests the NDX might reach 28,000 by late April 2026. Technical indicators reinforce the medium-term bullish case, with improved market breadth-evidenced by a rising percentage of NDX components trading above their 20-day and 50-day moving averages-suggesting resilience as long as key support levels like 25,165 remain intact.

However, the path is not without risks. Renewed US-China tensions and concerns over AI-related export violations have introduced short-term volatility, complicating the technical outlook.

Bearish Technical Signals: A Warning of Divergence

Despite the bullish framework, recent technical indicators paint a more cautious picture. A bearish engulfing candle on the weekly chart of the Invesco QQQ Trust (QQQ), the NDX ETF, signals a shift in sentiment, with sellers gaining control. This pattern, coupled with the NDX slipping below key support levels and breaking a bullish trend line, raises concerns about near-term weakness.

Quantitative data from underscores this divergence: the 14-day RSI at 42.94 places the index in a sell zone, while the MACD stands at -2.58, reinforcing bearish momentum. The 5-day and 50-day moving averages (25,482.51 and 25,476.03, respectively) also act as sell signals, though the 200-day moving average (25,437.26) remains a buy signal. The Fibonacci pivot at 25,471.66 is now a critical level to monitor for directional bias.

Contrarian Sentiment: A Double-Edged Sword

Market sentiment data reveals a paradox. The CNN Fear & Greed Index, a widely watched barometer, shows an extremely bearish reading of 21, reflecting widespread investor fear. Similarly, the 5-day put/call ratio for the NDX has risen to 1.4, above its 52-week average of 1.2, signaling heightened bearish positioning. This ratio has surged 4.2% over five days, driven by a 2.7% increase in put open interest.

Yet, contrarian indicators are mixed. The AAII Investor Sentiment Survey for the week ending December 31, 2025, shows 42.0% of investors bullish-a rise from 37.4% the previous week and above the long-term historical average of 37.5%. While extreme bearishness often precedes market bottoms, the recent uptick in bullish sentiment suggests a potential overbought condition. This duality complicates the interpretation of sentiment as a definitive reversal signal.

Synthesis: A Tenuous Balance Between Momentum and Correction

The NDX's current juncture reflects a tug-of-war between bullish Elliott Wave momentum and bearish technical divergence. The index's ability to hold above 25,165 and retest the 25,471.66 Fibonacci pivot will be critical in determining whether the rally extends to 27,225 or faces a corrective pullback.

For investors, the key lies in monitoring both technical and sentiment extremes. A break below 25,165 could invalidate the bullish case, while a sustained rally above 27,860 might signal an overextended market. Meanwhile, the put/call ratio and CNN Fear & Greed Index suggest that while fear is pervasive, it may not yet be extreme enough to trigger a broad-based reversal.

Conclusion

The Nasdaq 100's trajectory hinges on its ability to navigate conflicting signals. While Elliott Wave patterns and Pi-based cycles point to a final leg higher, bearish technical indicators and mixed sentiment underscore the risks of complacency. Investors should remain vigilant, using key levels as dynamic decision points. In a market where extremes often precede reversals, the coming weeks will test whether this is a climax or a correction in the making.