S&P 500

Summarizing Our S&P 500 Outlook

Published 9th February 2018 & validated 16th March 2018

The S&P 500 is close to the end of a medium-term cyclical trend, which started in 2010. Some parts of the respective rally will be corrected in the months ahead.

Short Term S&P 500 Elliott Wave Analysis

Published 16th of March 2018 @  10:10 EST 

It remains very likely that the S&P 500 gets at least close to its all-time high in the coming weeks. We conclude this regardless of the Elliott wave pattern that forms eventually. The most plausible Elliott wave case remains still another spike into a new top.

Wave action from February 7th- February 9th is a zigzag. The subsequent wave action to the upside counts best as an impulse (from Feb. 9th) followed by a 3-wave move (from March 2nd) to the upside. There is no such Elliott wave pattern, which qualifies as complete. Hence, we need to see some more wave action to the upside to complete the pattern.

We assess two price paths currently as most likely: The black paths continues directly to the upside as part of a third wave. Price action must not violate the yellow trend channel significantly if this case should be correct. The best alternative is currently a complex fourth wave, which is near completion. Another impulse to the downside leaves us a textbook double-three combination on the charts. It is decomposed of a zig-zag, an expanded flat, and a final flat.

The technical analysis case here is strong for a push beyond 2,800 and possibly into a new all-time high. However, the detour via the red path makes also a lot of sense. It would push other global indices and risky assets further down and into divergence. This is exactly the action we expect from a top-building process of primary degree. Hence, we see black at higher odds if price action takes place inside the yellow channel and switch to red otherwise.  

Medium Term Trend Analysis

Published 16th February & amended 16th March 2018

We expect worldwide topping action in risky assets. A phase characterized by non-confirmation of higher highs among risky assets. As a consequence, positions need to be monitored closely and a trading approach will outperform a buy-and-hold strategy going forward.

The S&P 500 is most likely in cycle wave I, which started at the March 2009 bottom.The US blue chips index needs most likely another push into a new all-time high in order to complete minor wave 5 of intermediate wave (5). This action completes primary wave 3(circle).

Our S&P 500 outlook suggests sizable correction ahead of us in 2018. We expect the correction in primary wave 4° to start in the months ahead. It should trace out as a deep and complex structure due to alternation guidelines.

Long-Term Trend Analysis

Published 17th October

Long-term the S&P 500 has completed a (IV) wave of supercycle degree at its March 2009 bottom from a long run Elliott wave analysis perspective. The long-term picture is analogous to the Dow Jones, which shows alternation between supercycle wave (II) and (IV). Wave (II) was sharp, simple and retraced a huge portion of wave (I) whereas wave (IV) finished as a complex and shallow irregular flat. Nevertheless, supercycle wave (IV) retraced more than a 38.2% Fibonacci on a log scale. The wave action in between the corrective supercycle waves fits neatly together into an extended third supercycle wave.

We have labeled the chart as cycle wave I at its top, which we have not seen yet. Supercycle (I) took about 100 years time and lifted prices more than tenfold. We expect something similar in time and space from supercycle wave (V).

Technical Analysis