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S&P 500 Closing in on Local Top?

Published 04/20/2023, 02:35 PM
Updated 07/09/2023, 06:31 AM

In my book “Tomorrow Happened Yesterday – Bringing Together Life’s Cycles,” I start by quoting Richard Nisbett:

You know, the difference between you and me is that I think the world is a circle, and you think it is a line.” [The Geography of Thought. How Asians and Westerns Think Differently-And Why.]

Society and its many facets, such as the economy and the stock market, move in cycles. And as I showed in my update from last week, see here, the US stock market, in this case, the S&P500 (SPX)- is now in what is called in Elliott Wave Principle (EWP) terms a Super Cycle Wave-IV.

Besides, our “Bullish outlook for the next several weeks to months is also based on two additional layers of information; … average pre-election year seasonality and the Crude Oil-Dow Jones 10-year-lag relationship” was correct, and we remain Bullish as such.

Moreover, back then, the index was trading at $4120 and has since reached higher to $4170 and now trades in the $4140s, proving our Bullish POV, as we found by using the EWP that “The index should now be in green W-5 of red W-iii?”, which in layman terms means “higher prices.” See Figure 1 below.

Figure 1.
S&P 500 Daily Chart

This update focuses on the price action in the grey box within the more prominent black box, which captures the time frame shown in Figure 2 below. Namely, it appears most likely that the green W-5 is morphing into an ending expanding diagonal (EED).

It is an overlapping advance consisting of three waves up and three waves down (a-b-c’s) sequences, making it harder to track and anticipate. But, so far, the index has topped and bottomed where it should go for the grey W-ii, -iii, and -v of the green W-5 of the red W-iii. See the blue boxes in Figure 2 below.

Figure 2.
S&P 500 1-Hour Chart

It means that as long as the index can stay above $4112 and especially $4085, we should allow for a last push higher into the $4180-4190 zone, which matches with the lower end of the red W-iii target zone of $4190-4285 shown in Figure 1.

Once the red W-iii target zone is reached, we should expect the next more significant pullback, red W-iv?, to $4050-4140 before the last hurray “red W-v?” gets underway, as shown in Figure 1 with the dotted green arrows.

Given that the index dropped to as low as $4122 today, the Bulls have received their proverbial “shot across the bows” and we now have our cut-off levels below which we know the index has already topped. Those levels are our insurance policy to lock in profits, minimize losses, and keep outperforming the market. Given the, in last week’s update shared, pre-election year seasonality peak in early May, the current EWP count matches well.

Latest comments

You have all lost everything you understand about how you price an index. $200 a share times 15 or 16 X equals 3000 to 3200. We are 1000 points over value at minimum. I’m tired of this Elliot wave bullshit. Try a 35% correction that’s been waiting for 15+ years. We have 10,000 head wins does your rotelle wins. But the market has acted like the reverse for 16 years. Completely incorrect. Remember fundamentals and evaluation and earnings is how you price indexes or equities. Everyone has forgotten and lost their way because they are brainwashed by free money. This is been a fake market since 2008. but you are all too young to understand. I’ve been trading since 1979. I’ve seen more cycles than this guy has ever seen doc.
the gains of first guarter are not good how it will go up
nope. we r heading 4600 +. eave 3 in place
wave 3
Counting waves helps , but topping price action trumps any wave count. X Date now expected to be early June, hold on to to your seatbelts, this will be one heck of a roller coaster. After the dust settles, we will eventually hit 3200 or below.
Thank you M. le docteur A. ter Schure
How many of those pre election years, were we facing a debt ceiling stand off, an economy facing a likely recession with the fed coming to end of a hiking cycle and still pushing qt? I've not checked but I'm going to guess it's 0
Doesn't matter at all for EWP to work.
like the grafs and assesment. nice job, thank you
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