Thursday, June 23, 2016

Possible SPX Head-Fake Projections

This post is mostly an extension of my previous SPX head-fake post. Although a potentially huge bear market setup has been evolving for nearly 2 years now, SPX has reached another potential climax of sorts. In terms of EW, SPX could be completing a 5-wave EDT from 1810 and could truncate/pierce the 2111-2121+ price area or even reach a new ATH. Dow actually made a higher low when SPX made a lower low at 1810 and thus its recent action looks more like a sideways 4 rather than an EDT and appears poised to reach 18016-18168+ and possibly a new ATH. And these Dow/SPX counts could be argued to complete counts from March 2009 imminently.

However you interpret the waves, I think most people recognize we have this huge multi-year SPX 1800-2100 trading range which is likely to result in a huge breakout perhaps preceded by a minor head-fake. If my long-term analysis is correct in projecting SPX 1100s at a minimum in CY2016 and perhaps early CY2017, I have to lean toward the bearish outcome. If so, seasonality, the elections, the Fed indecision and economic uncertainty suggest this could largely occur by Oct/Nov with perhaps another low in Q1/Q2 CY2017. A breakdown below the SPX 1800-2100 range should reach a measured move of 1500 minimum. With summer doldrums likely and bulls still likely to interpret drops as buying opportunities until proven wrong, one scenario that would tie all this together would be...
1. imminent top at SXP 2108-2150 (bulls and bears mostly sell this together)
2. a 50% +/- retracement of SPX 1810 to SPX 1950-2000 probably ending in July (bulls fairly heavily buy the 38-62% Fib retracement)
3. after a large rally, another large drop to a 62-78% Fib retracement of SPX 1810 to 1850-1950 probably ending in Aug (bulls buy but more tentatively)
4. after a small rally, another large drop only hesitating at 1810 and then swiftly falling to 1750, 1700 and maybe 1600-1650 ending in Sep/Oct
5. after a short-covering rally perhaps backtesting 1800, the floor drops out to 1500 and possibly even 1100s ending in Oct/Nov

Stay safe. Good fortune.

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