Bull Market Could Continue Through Q1 2021

Cycles:  Looking ahead!  90-yr cycle – last low: 1932. Next low: 2022 

7-yr cycle – last low: 2016.  Next low: 2023

Market Analysis (Charts courtesy of QCharts) 

SPX-IWM weekly charts

Over the past few weeks, IWM has caught up with SPX by outperforming it. There were signs this week that it may be slowing down as we approach the next short-term projection. However, this does not mean that we are anywhere close to a major top. That could still be 4 to 6 months away,

SPX daily chart

In spite of the negative divergence that was showing in its oscillators last week, SPX has managed to push ahead and make a new all-time high, going against the influence of a cycle that should have produced a short-term top this week. We know that cycle phases can be disrupted by news which can impact the economy and in this case, the promise of another relief bill which could become law by the end of next week is the cause. There is some expectation that Congress will finally come through with a compromise bill which can satisfy both parties. This possibility caused the index to only go into a small holding phase after reaching its last target of 3660+, and quickly build another congestion level which would permit it to reach another short-term top; it has also allowed SPX to remain inside its steepest intermediate trend line (blue) which, when it is broken, will mark the onset of the next short-term correction (this will be discussed in more detail in the hourly chart section). 

Although the oscillators retain some negative divergence, they have improved their positions, especially the A-Ds oscillator which improved the most.   

  SPX hourly chart

Considering how SPX closed on Friday, it is obvious that it intends to move higher unless some negative news occurs over the weekend. After reaching its 3660+ projection (original target), the index manufactured another level of consolidation which can carry it to 3740 (the maximum amount of uptrend we can extract from the base created by the Point & Figure chart at the 3520 level). More specifically, the chart formation argued for the move to logically stop at 3660+, but optimism about another relief bill is forcing us to extend the count to include another part of the chart that had been considered too extreme to consider (top green mark on the chart). 

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The above comments and those made in the daily updates and the Market Summary about the financial markets are based purely on what I consider to be sound technical analysis principles. They represent ...

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