I spent a few minutes with Jeff Macke at Yahoo Finance last week talking about the S&P 500. I was a little afraid to meet him so I tried to be polite. In that interview I discussed how the current price action looked like consolidation on a longer term chart, but that 2390 was a good long term target. The full story and interview can be seen here. But there was one chart I left out because I did not want to scare him. Here it is.
The chart above shows the Elliott Wave interpretation of the S&P 500 since 1993. If you don’t know Elliot Wave Principles see a 5 Wave impulsive structure in the direction of a trend followed by a 3 Wave corrective pattern. Within both the 5 and 3 Wave patterns the waves alternate positive and then corrective. The pattern can then repeat or do something else. This 5 Wave pattern played out from 1993 to 2000 followed by a 3 Wave correction that ended in March 2009.
Since then the new 5 Wave impulsive pattern has been running and it looks like Wave III has just completed. Moving into Wave IV might then be scary and cause worry of a pullback, and it could. But another principle of Elliot Wave is that is Wave II is a corrective pullback, then Wave IV often corrects mainly though time. It is flat. The Final Wave V then would project higher approximately the same length as Wave I, or to the 2400-2500 area.
As it turned out Jeff Macke was a very nice guy and friendly. And I hope you see now that Elliott Wave does not have to be scary either.
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.