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S&P 500 - End of Corrective Wave B or Motive Wave 3?The most interesting thing I see is that the S&P tagged a perfect 1.382 above the 2020 Feb top (corrective wave), but it came up a hair short of 1.618 from the March low. I am not sure a Wave B can go as high as 1.382. I have only read that it can go to 1.236. However, a few people have commented to me that they have seen text cite 1.382 as the absolute max. In all of my wave analysis I have never seen a motive wave come up short of 1.618 for a wave 3, especially considering how much FOMO there has been this past year. What I do have is the megaphone pattern established. The origin is on Dec 6, 2017. This date was pretty clear for the support line, but the resistance line has been tricky. Most of us though that it had already been breached (pink line). IMO, I think the rally in February last year would have tagged this resistance line also, but COVID ended it early. Thus, the crazy rally that we had this past year. Where does it go from here? Don't know exactly. If we just ended motive wave 3, then we could hit a wave 5 top around 4300. If we are in a corrective wave, then the bottom could be really far down. A full 1.618 retrace would be 1147, but that seem hard to believe. A large correction to 1.146 retrace would be around 1939, which is about the same % lower compared to the previous major lows since 2018. I think a more likely level is 0.382 retrace at around 3220 level (back to around June 2020 high). Corrective theory Motive theory Weekly Regression channels Rally Channel Rising wedge pattern
U
by Dr_Roboto
3
S&P 500 - Ridiculous drops and rallies are normal at the topI have been getting some questions about these crazy drops and rallies of late. I thought that I would just lend some context to them. I marked up the SPX through the dot com and housing market bubbles. As you can see, the large swings in price we are seeing now are normal for such a bull market as it starts to approach the top (markets don't go up for ever). I am not saying we are at the top, just really feeling like one. We are now in the pure speculation/gambling phase of the market. Investors start feeling uncomfortable with how high prices are and at the first sign of weakness panic selling sets in as people take the profits. Risk on bulls patiently wait and buy like crazy when the see a bottom, and up the price rockets again. Rinse and repeat while the market keeps trying to climb higher. Which one of the drops will be the last and there is no more rally? No one knows. If you are a long term investor this is probably not the market for you. If you have the stomach, then there is a lot of money to be made with these big swings. Just note that we have not seen anything like the swings in the past, at least not yet. A 3-5% pullback and recovery rally is nothing to stress about. The dot com and housing market bubbles saw 10-15% correction and rallies.
SP:SPX
by Dr_Roboto
10
S&P 500 breaks below regression channel!I have been posting a lot about tops this last week or so. The percentage of the drop today is not massive, but it was enough to break below the regression channel. This was not a test from what I can tell. This is the clear sign a correction is in progress. This looks like it would be a Wave A and we could see a bounce tomorrow for wave B. No matter what, this looks like it will change the slope of the rally to be flatter or could be the sign of large correction.
SP:SPX
by Dr_Roboto
1
S&P 500 Wave Count - End of Wave 3?Waves based on fib levels. I am assuming that we are in a Wave 3 showing an impulse with extension. Could push from 1.618 to the 1.7 level to end wave 3. I hope that we will see a correction for wave 4, but wave 4's are usually less then 38.2%. If so then we still have a solid wave 5 to go. Guessing at a standard 2.0 extension to wave 5. I also see a clear channel that if you center the mid-line it nicely aligns with the 2.0 fib level. Waves are more art than science, so take it with a grain of salt. Major fib and waves Close up
AMEX:VOO
by Dr_Roboto
S&P 500 at the top of the channel - Looks overboughtS&P made a strong rally to the top of the rally channel. Broke above practically all my resistance lines on all my charts. I am see a strong sell from my SPX indicator and a buy on my VXX. Sometimes my indicator can trigger a little early so it may not be today but sometime in the next few days we should see a pull back. The 1d time frame still has not peaked yet, so watch that but it can be a little lagging compared to 4h. Take it with a grain of salt, but tread carefully. VXX
OANDA:SPX500USD
by Dr_Roboto
2
S&P 500 Channels: 1974, 1994, 2009, 2020If this is not the top, then there is no point in ever selling again as the Fed has completely destroyed the free market. QE has put the market on steroids and every correction from now on will only last as long as it take congress to pass more stimulus. Hope you enjoy the charts and maybe someday resistance lines will matter again. 1974 channel (end of oil crisis) 1994 channel (Netscape web browser) 2009 channel (Quantitative Easing - QE) 2020 channel (Covid and the end of the free market)
SP:SPX
by Dr_Roboto
16
S&P 500 - My guess on how it tops out in AprilJust a guess based on key resistance lines, rising wedge patterns, and waves. If a full on insurrection / civil war last week did not not slow this thing down, then I don't see what will until the next major earnings update. I think the smaller internal wedge will likely give us a top this week or early next and then fall to build support for the final push. I see it consolidating the last several days and so it could just completely break out to the up side of the blue wedge for an exhaustion top at the orange trend line. Then I would expect some kind of pull back to test support. As always, this bull rally likes to do the opposite of the obvious, so take this with a spoon full of salt.
SP:SPX
by Dr_Roboto
4
S&P 500: Aug 12 1982 defines all rallies including Friday's highAfter all the hundreds of trend lines and channel that I have drawn over the last year, I have finally found the most important channel and trend lines. Believe it or not they all originate from August 12, 1982 and Friday's high hit a key trend line. What is so important about that date. Here is some info from the Wall Street Journal. --------------------------------------------------------------------------------------------------------------- www.wsj.com It was on Aug. 12, 1982, that the Dow Jones Industrial Average dropped to its 1980-82 recession low of 776.92—almost precisely where the Index had closed in January 1964. Starting as a trickle, the decline in inflation and long-term interest rates picked up speed that summer, and investors in common stocks began to have confidence that they were being liberated from the shackles of double-digit inflation and interest rates, an innovation-sapping regulatory regime, and a tax code that was antithetical to capital formation. During that lazy summer, institutional and individual investors came to the conclusion that the back of inflation had been broken. Not insignificantly, they also believed that they had a friend in the White House. When Henry Kaufman of Salomon Brothers said that Treasury yields had reached their highs in a note to clients on Aug. 17, 1982, stock prices exploded. This provided free-market optimists with desperately needed evidence that their principles would provide a path forward. The simple—yet difficult to achieve—strategy of getting the government out of the way and turning the economy over to free enterprise set the stage for a period of tremendous economic growth and wealth creation. --------------------------------------------------------------------------------------------------------------- Now one point is not enough to define a line. We need a second point. Now I don't know exactly where the slope of this line originated, but I can find a clear pattern that exposes the originating line from 1982. It first is visible in May 1986, again in Aug 1989, July 1996, and most importantly during the correction after the dot com bubble July 2002 - March 2003. Defining this as the "Master Trend Line" you can determine the peak of every rally since then. How you ask? Well it is quite simple. You can create a parallel channel with this line, then you can pull up/down the other side of the channel to align the "dotted line middle" with key tops and bottoms of the major rallies. The top of the channel will then give you a very accurate guess at where the next rally will make a peak/top. It also works for corrections. The crash bottom in March 2009 is just an inverted version. What I have done in this chart is starting from this "Master Trend Line" created several channels (using different colors) that align the dotted middle line to key points (color coded crosshair icons). The line up perfectly. In the most basic case you just keep moving the upper channel up in price to hit key lows and highs. That is it, nothing more complex than that. Note the March 2020 low lines up very well with the middle line that established the July 2019 peak. Note that on Friday the S&P touched one of these lines. The channel middle is Feb 9, 2018. The low after the large correction from the super strong 2017 rally. The next most obvious level is the clear set of price patterns around the 2800 level. Setting the middle there moves the channel (orange) up to around 4100-4200. The next peak to align could be Jan 2018 or I think more likely the Sept 2018 peak as it clearly define a pattern through 2019-2020 (red). That would be around 4500-4600. We could align to the pink line that defined the July 2019 peak (dark red). That would be around 4700-4800. That is not all. I have also laid out the Elliott Waves starting at Aug 12, 1982 and used the dot com as Wave 1. The trick here is trying to figure out if March 2020 was the end of Wave 4, which looks like it was to me. Now the question is how much power will Wave 5. Note that since the March low the S&P has already eclipsed the price change of wave 1 ($1448). From a percentage size they are not close but I don't think that matters with waves, just price. One technique I use to estimate Wave 5 if we know wave 3 is this. Assume standard wave 1, 3, 5 with fib levels of 1.0, 1.618, 2.0. In this case we have an guess of wave 3 at an actual fib level of 2.236. I calculate a thing I call the Bull Ratio as 2.236/1.618 = 1.382. Now multiply the nominal 2.0 fib by this ratio. 2.0*1.382 = 2.764. The closest fib to the level is 2.786 @ $4143. That fib level intersects the orange trend line around May. One last thing. Here are my rising wedge pattern and trend lines. Well, that is what I have put together on my Saturday afternoon. Hope it is helpful.
SP:SPX
by Dr_Roboto
13
S&P 500 Trend Lines - It ain't over till the fat lady sings, BUTShe looks to be warming up. Here are the simplest yet best trend lines that I can come up with. Note that there is still a larger wedge that can take us into the February time frame. Daily - Note the large doji candle the day it breaks out of the rising wedge. The big boys then tried to take advantage of the low volume over the holidays to pump it back up, but yesterday with the market back in full swing it crashed back down. 4h - Holding on that trend line, but can't break back into the wedge lines.
AMEX:SPY
by Dr_Roboto
1