In August last year we already shared a very simple symmetry breakout target for the S&P500 of SPX2350, based on its long term chart, see here, and we’ve had this chart available to our premium members for even longer. This week the S&P500 reached that target, see below.
Mission accomplished? Can we now sit and relax, say “see I told you so”, and bask in our own glory? No, because we are not legends in our own minds, and our work as market forecasters is not finished until the stock market is actually finished. No rest for the wicked.
And as we showed two weeks ago; the market will go even higher, see here, with a first target of SPX2425ish. We’ve also had this chart also available to our premium members for much longer. The same chart for this week, see below, has been updated and the three vertical dotted lines show a “you are here” type of reference; with the most recent (black) line our current position and the two earlier blue dotted lines as reference because in November 2013 the weekly RSI5 was similar to this week’s and in June 2014 the weekly MFI14 was similar to this week’s.
In both case we can learn that the market back then continued higher over the weeks and months to come, with the occasional, necessary corrections in between. The Technical Indicator (TI) readings confirm our (Objective) Elliot Wave counts in that the market is now in the heart of a third of a third wave, telling us we can expect several smaller and larger corrections on the way up to the final 5th wave. This is in line with the “you are here” observations from the weekly chart.
Please note that (peak) overbought conditions are not a bearish sign of an impending large correction. Quite the contrary. It’s a sign of a strong healthy Bull market that will go much higher until negative divergences on the weekly TIs start to catch up. This argument is underscored by the fact that all weekly Simple Moving Averages (SMAs) from the 20 to 200w SMA are all pointing up, and all are bullishly stacked (20>50>100>150>200). Compare that with mid-2015 to mid-2016 and you can see exactly what we mean.