After yesterday first step indices made a strong second step towards a reversal. I’m almost ready to go bullish, but, provided the damage done so far, I’d like to see a confirmation on the weekly frame before declaring a rally. There is also one aspect from the Elliott Waves perspective that keeps me neutral for now.
Let’s evaluate from different angles.
This SP500 overview contains the charts and covers:
– SP500 and other indices – TA and Japanese Candlesticks analysis;
– short and long term charts and forecasts for SP500.
If you want to learn about perspectives for Nasdaq, Dow Jones, Russell, FTSE, DAX, CAC, ASX and NIFTY, the Weekly Analyses were updated over the weekend and can be viewed here:
The candle formations continue to stay bullish for all ETF above. The technical support is stronger that yesterday. If this rally continues into the end of week, there is a good chance that the support fully turns bullish and the weekly frame becomes bullish as well.
If we look at the 3-day candles (above) for SPX, despite the size of the candle that closed today, it is still bearish. It would be bullish if it closed about 0.6% higher.
Yesterday I mentioned that SPX could be forming a Falling 3 Methods candle combo. It still remains the main hypothesis until negated.
ELLIOTT WAVES – SP500
The long term forecast was first charted in September and simplified in December. The detailed analysis was 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/
The most recent chart can be viewed in the weekly analysis.
SP500 Short Term
We have been tracking these paths since February 5th. So far, we have not seen an event that would trigger a change. However, after the last two days, SPX opened an option for a much longer corrective action and I would not be surprised if this corrective wave will take a year or so to develop, similarly to Russell in 2021.
In order to cover this scenario, I added a blue count.
- Red (primary).
Main hypothesis – a complex wave B ended and wave C has started.
Minimal target: $3850.
Target area: $3230-80; the most probable – $3248.
A rally towards ATH. The only concern about this scenario is a poor alignment among the major US indices. They still could align in case of wave truncations, but I am skeptical of such counts until proven otherwise.
Wave 5 of C is about to start.
A much more complex corrective wave that would take multiple months to complete. A possible shape – rectangle.
SPX (and other indices) are quite bullish on the daily frame. The technical indicators are slowly turning bullish.
The indices have a good chance to build upon the rally of the last two days and produce a strong reversal candles on the weekly frames on Friday.
Until the weekly confirms a reversal, I continue to maintain the bearish targets identified at the beginning of February.
Mid Term Forecast:
(unchanged, copy from the previous six weekly analyses)
Targets: $3850-3250, or 20-33% loss off the top.
Minimal target – $3850 or 20% loss.
Possible timing – mid April.
For a complete picture, it is highly recommended to read the daily VIX analysis:
*** End of Analysis
Follow the links below for detailed analyses of global indices, commodities, cryptocurrencies, and stocks.
If you already follow @InvestingAngles on Twitter and do not want to miss an important post, you can follow the blog on WordPress by email (free service). In this case, all posts will be sent to your inbox directly.