Sunday, March 26, 2023

S&P 500: Has Rally To 4000 Begun?


In my  from late last week, I showed two Elliott Wave Principle (EWP) options for the to get to 4000:

1) shallow retrace (about) complete,

or 2) a deeper retrace first.

Hence the “will it hit 4000 now or later” title.

Fast forward, and the index has once again broken above important resistance at SPX 3590. Will it hold this time?

Based on the Elliott wave count I am tracking (option 1 in my previous update) that is a “yes,” and the “pay me now” path has been activated. The index will have to close back below SPX 3590 from current levels to deactivate it.

Simple technical analyses of the daily chart show how the SPX has bumped into resistance five times: Sept. 2, Nov. 9, and several times since. The Nov. 16 rally was a false breakout. Those can always happen: be aware of them as there are never guarantees in the markets, only probabilities of possibilities.

Thus, on the sixth attempt it is logical to assume the current breakout is here to stay. Besides, we are looking at what is possibly a classic triangle/bull flag pattern (in black), which targets SPX 3950 upon activation. So far so good. Then we have the SPX 3230-3590 range the index has been in for the last two months. Simple symmetry breakout targets also SPX 3950 (in blue).

Lastly, the short-term EWP count from my previous article projects to around SPX 3800 for a pit-stop target. All valid as long as SPX 3590 holds, and I really do not want to see the index close back below SPX 3540.

Figure 1: 

Thus, with objective, factual TA and the EWP on our side, we know what upside targets to look for, and where to place our stops. It really does not get much easier than this.

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