Approaching An Important Target

Chart, Trading, Courses, Forex, Analysis

Current Position of the Market

SPX Long-term trend:  There is some good evidence that we are still in the bull market which started in 2009 and which could continue into the first quarter of 2021 before coming to an end. 

SPX Intermediate trend:  New intermediate uptrend ending?

Analysis of the short-term trend is done daily with the help of hourly charts. They are important adjuncts to the analysis of daily and weekly charts which determine longer market trends.

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

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

Short-term low:  1/18

Market Analysis (Charts courtesy of QCharts 

SPX-IWM weekly charts

For the first time since early September – the date when it issued its last warning of an important top – the Russell 2000 (IWM) is showing relative weakness to the S&P 500 (SPX).  This is a sign that we are probably reaching an intermediate top which should be followed by a correction.  At the same time, SPX is drawing near its projection target of ~3770.  The final high could come as early as next week.  

This should be the first of three consecutive highs which could mark the top of the bull market.  It should be followed by two more highs, the next at 4130 and the final one at 4550, the latter occurring around April or May 2021.

SPX daily chart

After SPX completed an a-b-c intermediate correction at 2234, it rallied sharply for a week and continued moving higher in a crawling pattern which has now lasted eight weeks and which appears to be coming to an end. As was mentioned above, SPX is close to reaching its 3770 projection (derived from one of the phases of the March low) and IWM is also signaling a market high.  

The crawling pattern consists of consecutive small rising channels with the last one currently underway and taking the index to its anticipated top.  The pattern from the November high can either be  interpreted as a narrow channel or an ending diagonal which could retrace as low as one of the parallel trend lines drawn below during the correction.  We will have to wait for a reversal to take place to see if the top P&F formation gives us a potential downside count for the pull-back.  In the meantime, we can resort to the normal Fibonacci retracement levels of .382 (3568) or .50 (3504) to determine its extent.  

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