Major US indices continued upwards and are close to confirming the rally on the weekly frame. Will they be able to keep the pace for the next two days?
Let’s evaluate the indices from different perspectives.
This SP500 Daily contains the charts and covers:
– SP500, Nasdaq, Dow Jones, Russell 2000 – TA and Japanese Candlesticks analysis;
– short and long term charts and forecasts for SP500.
TA & CANDLES
The daily candles today are mixed. While SPY and IWM seem to be on track and are gaining momentum, DIA formed a candle that can be viewed as an Evening Star/Spinning Top which would require a confirmation.
QQQ candle stopped at 200 DMA and there is little confidence at this point that it will continue the rally. In addition, the 50/100 DMA for QQQ will make a bearish cross tomorrow.
If we look back (chart below), these crosses happened in 2018 and 2020. In 2018 it led to a prolonged bear market and in 2020 it happened after the trend reversal.
From the perspective on the monthly and weekly candles, the trends are still bearish, but there are some chances of printing favorable bullish formations at the end of this week. I hope the decision will be made this week.
ELLIOTT WAVES – SP500
As the worst bearish formation – Engulfing – already happened on the monthly, the odds are increasing for this long term bear scenario.
Detailed forecast: https://investingangles.com/2022/01/20/sp500-long-term-forecast-bear-case-20-01-2022-spx-spy-sp500-es_f-elliottwave/
SP500 Short Term
- Red (primary).
Until proven otherwise, I believe SPX is working on a very complex wave B, possibly in wave b of (b) of B.
The long term target remains the same: wave C towards $3850-3250. The targets are projected using various techniques. Refer to the Long Term SP500 study on January 20 (link above).
Timing for wave c: end of February – 2nd half of March.
SPX makes a direct move towards the targets. Invalidated if ES moves above $4586.
SPX develops an Ending Diagonal for wave 5 towards ATH (as on the Bull Case chart).
MID-LONG TERM FORECAST:
Expect SP500 to move lower in February, most likely in the second half.
Targets: $3850-3250, or 20-33% loss off the top.
Minimal target – $3850 or 20% loss.
From the monthly forecast on January 30:
The indices could rally in the next 1-2 weeks, the rally could possibly experience many unexpected movements (see-saw).
Short Term Target: $4500-4680.
Keep in mind that this is an attempt to forecast a wave B, the most unpredictable among the corrective waves.
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