The below is an excerpt of this week’s weekly digest available to premium members only.
“The chart in Figure 1 below we shared with our members a while ago and it’s a good chart to start with as the breakout in 2013 of what was in essence a decade long consolidation between SPX800 and 1575 (from 1997 to 2009) should simple target SPX2350. Note the gray uptrend arrow since the 2009 low: price remains above it and thus the long term trend is up.
Figure 1. SPX monthly chart. Decade long consolidation breakout targets SPX2350ish
When we zoom in to the price action YTD, using a weekly candlestick chart, we simply see two bull flag patterns (Figure 4 below). The market went sideways March-June between SPX2000-2100 (green rectangle); flushed out the weak hands during Brexit (black arrows) and then quickly moved to new ATHs. Since mid-July we’ve had a sideways market between SPX2160-2190 (Red rectangle). Hence, can we expect a quick flush out again before the market quickly moves to new ATHs once again? Bottom line: we have two shorter term bull flag patterns that both target to around SPX2325; very similar to the target given in Figure 1.
Figure 2. SPX weekly chart. Two bull-flags (green and blue) both target around SPX2325
Lastly, our monthly TI chart… In summary: …, the weight of the evidence clearly is in favor or more upside. Short term downside (…) can certainly not be excluded but will only be either a buying or a hedging opportunity.”