Wednesday, May 25, 2016

SPX Update: Upside Target Captured

On May 20 (after SPX captured its downside target zone from May 4), I attempted to sort through the virtually-infinite options, and ultimately arrived at a preferred target of 2070+ for the next move.  Yesterday, the market captured and exceeded that target.

People who are unfamiliar with attempting their own Elliott Wave analysis may not realize that predicting the C-wave of an expanded flat is one of the most difficult calls to make, because there is virtually nothing in the price pattern that tips the market's hand -- which is one of the reasons I included so many caveats when I made that call.

Now that we've broken the relative high at 2071, it at least clears a few options from the table (although I was never showing those options on this chart, so there's nothing to delete or add):

In conclusion, there are two options for the C-wave -- one is to stall near current levels (blue 2), the other is to stall north of 2085, but south of 2111 (red 2).  The view that 2025 is most likely a B-wave (thus due to be broken) remains modestly preferred, so we should stay alert to a turn developing in the near future.  Yet because of the ambiguity at the bottom and the 2022-25 target capture, we can't get complacent here, and have to consider the alternate "Bull: 5" count -- so bears who are inclined to take action may want to act against small impulsive declines, and stay nimble if the level they acted against is subsequently cracked.  Trade safe.

No comments:

Post a Comment