This candles forecast for SPX, Dow Jones and Nasdaq was shared with subscribers on February 11 at the beginning of the day. Remember what happened on that day? Remember what happened this week?
This is how it looks now and I still hear a lot of skepticism about Japanese candles.
The candles is not the only tool we use in out forecasts. A symbiotic mix of TA, candles and Elliott Waves helps us to chart the most accurate forecasts.
This week registered so many events on the large time frames in SPX and VIX that I started to think whether my current forecast of $3250 for SPX is low enough.
The VIX Weekly report was posted yesterday and I highly recommend to review it before digesting the SPX one below.
This SP500 overview contains the charts and covers:
– SP500 – TA and Japanese Candlesticks analysis;
– short and long term charts and forecasts for SP500.
This analysis is part of the Weekly Series – US Indices, Cryptocurrencies, Commodities, Currency, Large Cap stocks – that can be viewed here.
TA & CANDLES
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The candle in January was Engulfing and the odds remain bearish until canceled.
As you can see on the chart, the monthly candle crossed 8 EMA and there is a good chance that it ends the month there or lower.
From the technical perspective, the most concerning is the event that is likely to happen next week (just a few points away). As pointed by the purple arrows, this event happened in 2018 and 2020 before significant declines. I would like to emphasize that this time the amplitude is bigger.
The most important events on the weekly chart are a bearish Engulfing (circled) that is now confirmed, a bearish cross of moving averages (red arrow) and a closure below the blue line. The majority of indicators signal a continued move lower.
The index completed a Falling 3 Methods formation on Friday and the odds of moving lower are very high.
In the previous days SPX confirmed a break below the long term moving average (red arrow). The trend is healthy bearish. The next event that looks imminent is the bearish cross of the two MA (purple arrow).
Two indicators signaled a possible entry into wave 3. If confirmed early next week, be aware of a possible acceleration down.
To summarize the candles and TA: there is absolutely nothing bullish in the picture.
ELLIOTT WAVES – SP500
This long term forecast was first charted in September and than simplified in December. The details were posted on January 20 and there have been no changes since: https://investingangles.com/2022/01/20/sp500-long-term-forecast-bear-case-20-01-2022-spx-spy-sp500-es_f-elliottwave/
SP500 Short Term
We have been tracking these two possible paths since February 7th. So far, we have not seen an event that would trigger a change.
- Purple (primary).
Main hypothesis – wave C has started. So far, the wave down looks motive and it is possible that SPX is entering wave iii of C, the heart of decline.
The target area: $3230-80; the most probable – $3248.
Alternative target: $3850.
Timing for the primary target: March 11-18.
SPX could make a more complex wave B.
The red count has the lower odds at this point.
Short Term Forecast:
SP500 is expected to continue decline next week. There is a decent chance of acceleration downwards.
Mid Term Forecast:
(unchanged, copy from the previous three weekly analyses)
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.
Link to the Weekly Analyses
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