The weekly chart of the S&P 500Index is shown below, with Bollinger Bands in their proper order of alignment indicates no overbought or oversold condition has been generated at this point in time. All three lower Bollinger Bands are in close proximity to each other, with stochastics near their low range indicates that the bottom likely has been put in place and upside strength is set to continue forward…if further declines were to occur, we should be seeing that right now but we are not. This observation is very important, as it suggests an accumulation of global funds into the US stock market. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. The %K in stochastic 1 has curled up, indicating the potential for further upside. With the current trend noted in the daily chart, the bullish upside bias is starting to show contagion in the weekly chart.
Figure 2 – Click on chart fora sharper imageThe monthly chart of the S&P 500 Index is shown below, with Bollinger Bands in their proper order of alignment indicates no overbought or oversold condition exists atthis point in time. Blue boxes on the chart indicate inflection points of the lower 55 MA Bollinger Band, with the first one of 2007 indicating a prelude to the top that saw a 50% decline. This setup was in place in early 2015 which made an ominous setup for late 2015,but the potentially sharp decline did not happen. Full stochastics 1,2 and 3 are shown below in order of descent, with the %K beneath the%D in all three instances. The %K in stochastic 1 has been beneath the %D for over 14 months, which historically has been associated with 30-50% declines. Since this has not happened, something else is going on here. With two long tailed doji’s over the past two months(The last one being an impressive hammer doji), upside over the next few months could send the lower 55 MA Bollinger Band curling back down again, which would trigger a final push higher in the broad stock market indices. If the %K in stochastic 1 continues to decline for another 6-8 months, with the price staying within the current range, a 10% move lies ahead for the S&P 500 Index by year end.The pattern forming is starting to look more and more like a consolidation pattern than a sharp decline.
Figure 3 – Click on chart fora sharper imageThe mid-term Elliott Wave count of the S&P 500 Index is shown below, with wave [X] thought to still be forming. Minimally, wave [X] could be done, but it is unlikely given the momentum of the bounce off the recent lows. Wave [X] could persist into May or June before heading higher in wave [Y] to complete the longer-term pattern, denoted in Figure 6.
Figure 4 – Click on chart fora sharper imageThe long-term Elliott Wave count of the S&P 500 Index is shown below, with wave [X].d still forming. Once wave [X] completes, wave [Y] should continue to rise for at least 12-18 months before a top is put in place. The ultimate top for wave[Y].d is expected to be around 2350-2400 before declining in wave e.Wave e should last 2-3 years, which would represent the end of the bear market from 2000 until present. A 20 year bear market with a higher high would be the outcome, which fits with Glenn Neely’s longer term Elliott Wave forecast for DOW 200,000 between 2060 and 2080. Focusing on the short-term, the S&P 500 Index is in a consolidation phase before heading higher into a longer-term top that should not be put in place until sometime between mid to late 2017.To negate this forecast, we would need to see two negative months with a downside move to 1650.
Figure 5 – Click on chart fora sharper imageTreasure Chests is a market timing service specializing in value based position trading in the precious metals and equity markets, with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven to be very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested discovering more about how the strategies described above can enhance your wealth; please visit our web site at http://www.treasurechests.info. Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. Copyright © 2005 www.treasurechests.info . All rights reserved. Unless otherwise indicated, all materials on these pages are copyrighted by www.treasurechests.info . No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.
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