Waves Show The S&P 500 Should Be Headed For A New High

Current Position of the Market

SPX Long-term trend:  There is some evidence that we are still in the bull market which started in 2009 and which could continue into the first half of 2021 before major cycles take over, and it ends. A move past 4500 is possible before the current bull market makes a final top and SPX corrects into its next major cycle low due in 2023.

SPX Intermediate trend:  Phase three (wave 5 rom 3723) is now likely underway.

A New Uptrend Starting?

Cycles:  Looking ahead! 

7-yr cycle – Last lows: 2009-2016.  Next low: ~2023

Market Analysis (Charts, courtesy of QCharts) 

IWM - SPX (weekly)

IWM continues to diverge significantly from SPX over the intermediate term. Based on previous similar divergences, one should be prepared for an important correction to take place in SPX, but perhaps not before the latter makes a new high to complete its current structure (IWM, SPX).

SPX daily chart

Last week’s letter warned that a minor cycle low was due on the 5/17-18 - time frame.  In fact, the cycle made its low on 5/19, bringing about a retest of the former short-term bottom.  From a structural standpoint, now that this has taken place, it is likely that wave 4 of the move which started from 3723 is complete and that wave 5 has started.  Friday’s index action appears to have completed the first leg of a new uptrend which should lead it to a new all-time high before long.  

The long-term P&F base established at the March 2020 low consists of multiple phases, each of which corresponding to a specific count which determines the consecutive price levels to be achieved by SPX during its uptrend, and from which it should correct before moving to the next indicated level.  This is a peculiarity which does not appear on a bar chart but can only be observed on a P&F chart.  The last phase gave us a count to 3950 which was attained precisely on 2/16/2021 and followed by a three-week correction of 227 points down to 3723 before a new uptrend started.   

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The above comments, as well as 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. ...

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