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S&P 500 - Approaching critical 3678 level (bear or bull rally)S&P is reaching its most important level of this rally. There is a high probability that all the market action from Feb to today is a large ABC corrective wave. Wave A was Feb-March. We could be seeing the conclusion of Wave B. So why is 3678 the important number? The maximum fib extension a Wave B (in Elliott wave theory) can make off of a Wave A low is 1.236. If you look at the chart you will see this 1.236 fib number two times. First, the one the measures the March rally. Second, the one that measures the recent corrective wave off the Sept high. What is amazing to me is that both of the 1.236 levels align almost perfectly at 3678! I don't think that is a coincidence. Watch this 3678 level and look for either a rejection or a breakout in the next week or so. Rejection = we have a confirmed bear market rally. Clear breakout and retest = bull market rally. This means we are likely seeing a motive wave 5 with an upside around 4000. Why I think this is a bear market rally. 1) You can also see the clear rising wedge pattern ending right at the 1.236(3678) level. That is a bearish pattern with a minimum expected break down to 3500 level. 2) Bear market (corrective) rallies are usually driven by a handful of companies. This was clearly the case through most of the summer with the FAANG stocks. A lot of stocks have ridden those coattails to this high, but you have companies like Tesla with a 1,200 PE ratio and Amazon at 90. Do you remember the Apple rally this summer? 3) There is a tsunami of debt, bankruptcies, foreclosures coming due to COVID. Sure, online retailers have down well and only line shopping in general has done well. However, the estimate is something like 10+% of small businesses will go out of business in the next 6-12 months. My understanding there is even more "zombie" companies. Why I think this could be a bull market rally. 1) I have seen the S&P break to the upside in the rising wedge pattern. Note that this type of breakout has shown to have the affect of significantly increasing the eventual correction that will follow the ensuing rally (think Feb-March drop). 2) The Covid vaccine "irrational exuberance" is strong in the market. With the release just around the corner and what looks like an early release in Europe, I think the market could go exponential like we say just the other week. 3) Government stimulus can wipe away a lot of debt/bankruptcy fear. If the government can pass something in the coming week or so, then this combined with the vaccine could really rally the market. Elliot Wave Count With some down trends and channel Trading Channels #1 Trading Channels #2 Some useful trend lines Worst case scenario correction Hope this helps. Good luck.
OANDA:SPX500USD
by Dr_Roboto
21
S&P 500 holding at 1.146(3644) fib level supportAfter such a hard push to break the 1.236(2680) fib level yesterday the S&P is taking a breather today. It is still up there and finding support at the recent 1.146 fib level. I am not sure what today holds for the S&P. This could be the start of correction or it could be consolidating for another attempt to break the 3678 level. Check out some of my other recent ideas for a better understanding of what is happening in the markets. Hope this helps and good luck.
OANDA:SPX500USD
by Dr_Roboto
5
S&P 500 - Repeat of July 20th or failure to launch?We are seeing the exact same pattern as mid-late July. I have noted all the key events on the chart, including the down channels that have the exact same slope. You can see in July that the S&P was able to clearly beak above the 0.854 fib level several times before making a clear breakout and then a retest. That clear level of bullishness was the trigger for the FOMO rally of August and September. This time around, the S&P is not able to break above the 1.236 fib level. It has touched it several times, but each time it has been rejected. I would expect this to continue for the next few days. On or around Dec 7th (Monday) the rising wedge intersects the down channel edge. I am willing to go out on a limb and say if it hits this line without breaking above 1.236(3681), then it will drop to at least the major (red) 1.146(3571) level. Friday and Sunday afterhours/premarket will be the difference maker IMO. Can they bulls use the low volume times to push this market above, just like they have down since the March bottom? Close up of recent July
OANDA:SPX500USD
by Dr_Roboto
2
S&P 500 - Today was the end or FOMO to 4000???Either today was effectively the end of the rally off the March low or we are getting ready to FOMO to 4000. The "W" pattern is the tell. Exact same pattern as June-July. I thought (as well as most bears) expected the S&P to end in the first rising wedge (you know the rational thing), but FOMO is a crazy thing and is the definition of irrational. Lets see what it does this time around. I go with down because that is what bears do :) Forgot a line (dark red / brown)
AMEX:SPY
by Dr_Roboto
3
S&P 500 - Breakout of 1M rising wedge - Rejected by 9 monthS&P broke out above it 1M rising wedge but was rejected by the rising wedge from the Feb/March crash and rally. This level is also the 1.236 fib level (see my other idea from this morning for a tons of details). Note that any time the market has broken one of these wedges it has always returned back (up or down). Will the S&P now correct out of the 1M wedge and test the large blue wedge support? OR, will we see a gap up tomorrow and make a run for the ressitance line of the blue wedge?
SP:SPX
by Dr_Roboto
S&P 500 - How high can this rising wedge go?S&P still rallying hard into Tuesday evening. It is approaching the flat top of a ascending triangle, which can either be a reversal pattern or a continuation pattern. What it is important to watch is that 1.2 fib level. In Elliott wave theory, a corrective wave can have a maximum of a 1.2 extension off the motive wave's peak and subsequent bottom. Assuming Sept high was the end (big assumption), then S&P is right around that value now. Also note, if for some reason we are in a larger corrective wave with Feb high the end of the motive wave and March the bottom, then the 1.2 fib extension almost perfectly aligns. Note the pink dashed support trend line goes right through the middle of the smaller rising wedge. If that is an indicator, then it would seem that the S&P is more likely to choose the bearish pattern. I keep trying to figure out what would push the S&P hard enough to break to the upside, but it is not clear. Yet, look at today (Tuesday). What a strong rally all day for no real economic reason. We all knew Biden was president elect for over two weeks, just more bull nonsense.
U
by Dr_Roboto
2
S&P 500: 1964-74 vs 2018-20 correction - Outlook not good1964-74 was the first large-scale multi-year correction since the great depression. Large enough and long enough that it took a decade to recover from it. I noticed that it had a very similar look to what we have been seeing since 2018. So, I overlaid a scaled version (scale factor = 31) of the 1964-74 market correction (the blue line). Now the time frame does not match, but surprisingly the high and low peaks align amazingly well. If the S&P does repeat the 64-74 pattern, then there is still major correction in store for the S&P over the next year. June 1964 - Sept 1974 Including great depression Current market since 2003
SP:SPX
by Dr_Roboto
2
S&P 500 - Cyclic Smoothed RSI with Divergence IndicatorI took a shot at applying my new combined cRSI and divergence indicator to my recent rising wedge chart for the S&P. It looks to have really good (not perfect) alignment so far. However, it is not very clear about the last week or two. It looks like it is showing a bear flag, but there is no crossover in the MACD yet. It looks bearish to me, but this market likes to be tricky like that. Info on the chart. 1) Red dotted lines = cRSI crossed back from overbought and crossover in MACD 2) Red solid lines = Bear divergence and crossover in MACD 3) Green dotted lines = cRSI crossed back from oversold and crossover in MACD 4) Green solid lines = Bull divergence and crossover in MACD 5) Black transition = cRSI crossover but NO crossover in MACD I created a single indicator that combines 1) Cyclic Smoothed RSI and 2) the Divergence indicator (bull, bear). Please refer to for info on how to use the cRSI indicator.
SP:SPX
by Dr_Roboto
5
S&P 500 - Here is my bullish guess for the weekMy guess based on the MOMO of this rally. I just don't think it is going to quit yet. I feel like it is going to go mostly sideways but generally head for that 1.236 fib level by mid to late week. For the bears, there is a gap on the 4th that has not been filled and that gaps also appears in the VXX. So, I think the bears may get their chance in the next week or so. When the market sees this much FOMO/MOMO it usually ends with a bang (e.g., June and Sept). I am just sitting on the sidelines until this thing makes an obvious decision one way or the other. Just to completely contradict myself, here is a more bearish look of the current rally. Hope it helps and good luck.
U
by Dr_Roboto
2
S&P 500 - I am bullish to 3676I really have this gut feeling that the S&P is going to hit 3676 before it corrects. It punched 1.146 fib ext off the March low on Monday and hung around all week. There is no way the algorithms are not going to stop until it hits 1.236 now. 1.236 is the max a corrective wave B can hit, and the market did not come this far from March to give up this close. See my recent Bull thesis idea for more complete details. Also not that the trend line off the March low lines up nicely with the previous rally and correction to make a 3676 top on Wednesday.
SP:SPX
by Dr_Roboto
10
S&P 500 Waves - Bull thesis 3675, 2920, then 4200Here is my bull thesis for the S&P that I have been looking into. - Wave 1 is dot com bubble. - We completed wave 3 in Feb. - Wave 4 was the March crash. - We are now working to completion of wave 5. However, we must complete the ABC correcitve wave following Wave 3. We are still trying to finish Wave B. The vaccine rally on Monday has given new life to Wave B as it now looks like it wants to achieve a full 1.236 extension both off the March low and seperately the Sept low. Both of these corrective waves have their 1.236 level align exactly. This would be an expand flat correction. It came very close on Monday by tagging the 1.146 level. The fact the market held strong all week makes me think it is going to take a run at the 1.236 level. Next we need to complete Wave C. The questions is how low with this go? Expanded flats typically hit 123.6% – 161.8% of wave AB. Assuming the 1.236 ext and overlaying that on my trend lines, it looks like a good place for the correction to stop is the 1.618 level, which also turns out to be the 0.5 fib level of the March rally. That would be the most extreme correction. It would also be possible for it to be slower and give us a 1.414 correction around the March time frame, but that does not line up with any major fib levels. After that corrective wave, it looks like it could be off to the races and 4200. That is a very bold prediction because it means the S&P will have to jump up to the next major trend line, which I think is possible as the S&P goes "parabolic" for the final Wave 5 push. Here are all the key things in one chart For reference, this is what the 1987 Black Friday market looks like. IMO, it looks very similiar to today in many ways. Back in 1987, there was not even a really economic cause for that crash. It took 2 years instead of 8 months. Today we are under crushing debt levels and a pandemic. Just goes to show you how crazy the current market. For fun, here is a chart for the bears.
SP:SPX
by Dr_Roboto
3
S&P 500 historical perspective using linear regression channelsI just love finding all of these technical things that help makes sense of why the market tops and bottoms at different locations. It is all based on linear projects of previous data! Not sure how to use it to trade, but from a history perspective it is pretty cool IMO. Here is an interesting data point. The dot com bubble was about 76% above the regression channel when it peaked. The S&P is currently at 50% above the regression channel. It does clearly make it look like the S&P is way, way overextended and clearly "bubblish." However, if the dot com bubble is the measuring stick, then we can go another 25%!!! Just because I can when using the layer capability of trading view. Hope it helps.
SP:SPX
by Dr_Roboto
8