SPY to target 234-242 in the weeks ahead
Updated
SPY has completed a nine year bull run that peaked at the end of January. This run on the log scale has been a beautiful 5 waves, with wave 3 a near perfect 1:1.618 extension of wave 1, and wave 5 a near perfect 1:1 extension of wave 3. As such, I now anticipate we see a significant retracement in the months/years ahead.
I hope to publish my SPY targets as this journey unfolds.
My first target suggesting the bull run is likely over has already been met (published here recently).
The next target is as elucidated above: SPY in the next few weeks will head for a touch of the 9 year log trend line. This trend line touch will depend on the speed at which the upcoming fall unfolds, but I'm expecting the touch will be in the 234-242 range.
To get there I first anticipate SPY gets a positive bounce off 257 (likely Monday, 3/26). I see two possible scenarios for this to play out.
Scenario 1 (pink arrows) takes SPY in a B wave to 266 for a 38.2% retracement of wave A down. Following this move up, SPY will start to head down toward 242 as wave C. 242 would be a nice 1:1 extension of wave A of this complex off a B wave move up to 266. I would be more likely to expect this if we get a slow steady bounce off 257 as SPY heads to 266.
Scenario 2 (green arrows) could unfold if SPY gets a sharp move up off 257 all the way to 272. If this happens, I will be looking for a sharp move down all the way to the lower end of our target range over a shorter period of time. This could yield wave C as a 1.618 extension of wave A with a target of 234 for SPY.
I'd appreciate your thoughts (and support)! Of course, this may not pan out (and almost certainly not exactly as outlined), and I therefore I will adjust my projections as this continues to unfold.
I hope to publish my SPY targets as this journey unfolds.
My first target suggesting the bull run is likely over has already been met (published here recently).
The next target is as elucidated above: SPY in the next few weeks will head for a touch of the 9 year log trend line. This trend line touch will depend on the speed at which the upcoming fall unfolds, but I'm expecting the touch will be in the 234-242 range.
To get there I first anticipate SPY gets a positive bounce off 257 (likely Monday, 3/26). I see two possible scenarios for this to play out.
Scenario 1 (pink arrows) takes SPY in a B wave to 266 for a 38.2% retracement of wave A down. Following this move up, SPY will start to head down toward 242 as wave C. 242 would be a nice 1:1 extension of wave A of this complex off a B wave move up to 266. I would be more likely to expect this if we get a slow steady bounce off 257 as SPY heads to 266.
Scenario 2 (green arrows) could unfold if SPY gets a sharp move up off 257 all the way to 272. If this happens, I will be looking for a sharp move down all the way to the lower end of our target range over a shorter period of time. This could yield wave C as a 1.618 extension of wave A with a target of 234 for SPY.
I'd appreciate your thoughts (and support)! Of course, this may not pan out (and almost certainly not exactly as outlined), and I therefore I will adjust my projections as this continues to unfold.
Note
This is the log scale of the last 9 years with the 5 waves noted, my predicted ABC correction, and the fibonnaci extensions that were described previously.
Trade active
Well, time for an update.
SPY has been following the outline above almost perfectly. SPY has risen to about 266-267 range (and has failed to break this resistance on several attempts). Yesterday I noticed what appeared to be an ascending wedge as the C wave of the corrective A-B-C complex labeled in blue. To confirm this, I was watching in the first hour of trading for the SPY to tap the upper trend line of this wedge (which it did) and then break the lower trend line on the subsequent reversal. It played out beautifully and the cross of the lower trend line was the indication that a short position could be entered (I bought shares of SDS, a 2x short fund). As you can see, I've labeled this move down wave 1. Wave 2 was a near perfect 0.618 retracement of wave 1. It appears we have put in the first subwaves 1 and 2 (also a 0.618 retracement) of what will be a larger wave 3 down that could take the SPY to the 261-262 region soon if we get a Fibonnaci 1.618 extension off wave 1.
Could this be the indicator that the larger wave B (in blue) has ended and we are now starting wave C down that could take us substantially toward our above stated target range? Time will tell. Correction waves can be complex (and prolonged) and difficult to count accurately until they are completed. It is a possibility, but not necessarily a prediction. Certainly worth considering however.
Note
Ooops, the the ascending wedge was part of the A-B-C complex labeled in green (not blue). Blue indicates the larger A-B-C correction.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.