Last week we showed a simple symmetry analyses for an inter top at around SPX 2140. See here. Although the market is in our opinion still on track to deliver that target before a larger more meaning full pullback should ensue, we also want to look at the bigger picture. With the month of October 2015 in the books as the largest up candle over the -at least- the past 10 years (not shown), we can be confident Primary V is underway. Question is of course how high it can reach. The weekly chart can help us with that: see below.
The weekly chart shows price is now well-above the 20w SMA and above the 50w SMA, where it found support the past week. First resistance is at around the dotted horizontal black line (2095-2105), and where price stalled on Friday (SPX 2094). Above that the upper Bollinger Band at SPX 2168, R1: SPX 2188, and R2: SPX 2319 provide resistance. These levels coincide with the monthly S/R levels (not shown).
According to Elliot Wave, 5th wave often extend 1.764 to 2.000x the length of the 1st wave, measured from the 2nd wave’s low. Since we count the advance off the SPX 667 low made early 2009 to the SPX 1370 high in spring 2011 as Primary I, the October 2011 SPX 1075 low as Primary II, we can calculate that Primary V should target:
- 1075 + 1.764x (1370-667) = 2315
- 1075 + 2.000x (1370-667) = 2481
Note that the green arrows show that a breakout above SPX 2135 signals a SPX 2300 target based on symmetry. Hence, the weight of the evidence supports the SPX 2300 region for a Primary V top. Of course we’ll adjust this target when the market tells us to. But, for now there’s nothing to suggest we have to do that. Namely, all TIs are pointing up, and there’s not a sell-signal anywhere. In fact, our weekly A.I. has been in a buy for 4 weeks now, providing the more conservative investor with at least 100p of gains. Following our daily A.I. buy-signal from late September would have provided anybody with >170p of gains already). As such the weekly chart tells us that we should continue to look up.
Intelligent Investing tracks many lines of evidence to determine the market’s next big move, Elliot Wave, S/R, TIs and TAs are several of them. Holistic objective analysis allows us to be on the right side of the market more often than not, without any preconceived notion or opinion. We use just the facts. Do you want to be on the right side too? Of course! Then please join us here. NOTE: prices will go up starting early November. Lock in that lower rate now!