In my on the , utilizing the Elliott Wave Precept (EWP), I discovered:
“SPX 3886.75 stays the dividing line within the sand. If the S&P 500 manages to rally above that stage with out dropping beneath final week’s low [the October 13 low at SPX 3491], the index accomplished 5 waves decrease from the mid-August excessive. We then should content material ourselves with a barely unorthodox impulse wave, however as stated, “the markets don’t owe us something.” I’ll then search for a multi-month rally to the SPX 4350-4650 goal zone. Conversely, a drop beneath SPX 3491 tells me that the final fifth wave to ideally SPX 3240-3345 has began following a great Fibonacci-based impulse sample. From there, the anticipated multi-month rally can then begin.”
The index didn’t drop beneath SPX 3491. As a substitute, it rallied above SPX 3886.75 on Oct. 28. See Determine 1 beneath.
As such, the index didn’t attain the best draw back goal zone of SPX 3230-3330, as I had first specified by .
Determine 1: S&P 500 each day chart with detailed EWP rely and a number of other technical indicators:
With the break above SPX 388.75, the multi-month counter-trend rally was confirmed. The index then topped and bottomed proper inside the best inexperienced and crimson goal zones final week. Counter-trend rallies, just like the June-August rally, comprise three waves (a-b-c). On this case, I’m searching for a blue W-B to finish subsequent 12 months.
Since monetary markets are fractal, W-B will include black W-a, b, c, with almost certainly W-b now underneath approach. This black W-b, in flip, includes three smaller crimson W-a, b,c. Pink W-b upward is now almost certainly underneath approach earlier than crimson W-c -downward takes maintain. The most recent wave will full black W-b, much like the June-July worth motion (purple containers). This sample matches with the common seasonality of a mid-term 12 months with a brand new Democrat administration. See the crimson line in Determine 2 beneath.
Determine 2 Midterm Election 12 months Seasonal Sample Since 1946:
Thus, for now, I’m taking a look at a short-term increased (crimson W-b), then decrease (crimson W-c) earlier than searching for increased costs once more (black W-c). However please keep in mind, counter-trend rallies are difficult as a result of they signify overlapping worth motion— particularly W-b of -B. So be prepared to alter positions shortly.
