I’ve learned that trading and investing activity tends to shift to short term, using daily and sub daily time frames. We are deluged by a tsunami of data, instant data that easily make our attention derail.
The S&P 500 index has pinged its latest historical minimum during March 2009 at 666.79. I can see the wave rise, so I please all satanists to exit the room now, I’m not here talking of anything esoteric, just discussing the stock market index usually called SPX.
Elliott’s Wave speaking, the one has been in May 2011 at 1370, then the two retraced to 1074 in October 2011. Since then we are inside the long term three. Inside this three, in November 2016 a sub wave (3rd of 5) that we may call the Trump’s Wave has started. It has started from a market that was scary, inducing the idea that a crash was imminent and flash crashing since a while. It has sprouted totally indifferent from perceived reality, strong, sometimes apparently blind, a pure force. In eight months the index has traveled from 2083 to 2440 (+17%). This is a bull market!
Now, I’m here to show what the model sees in the future, so how do bull market evolve? Let’s first say the the bull market dies in a pool of euphoria. Opening of the evening TV News and it’s done, better flip to short as soon as possible.
But it will take time to get there, we are nicely far from the end and before we get there we usually have a steep rise, that is the fuel of collective euphoria. This booster has not been switched on yet and we are probably in the previous phase, where the market builds a sort of continuous jigsaw rise along a slope, “rising steps” with long flat correction and ultra-fast push higher, plus, here and there, an instant crash to make you bleed. Actually, it seems recursive that at the end of the “jigsaw” phase, an instant crash fuels the successive market boom.
Targets? You want targets? well, 2500 is almost here, and beyond it may build a flash crash late summer. Then and long term, one year from now we may see the first real top around 2800, with a possible extension into early 2019. The following retracement in 2019 may squeeze the index down to today’s value.
In next six months we may get a couple of deep flash crashes, the second much larger than the first.
Please, consider that the model is adaptive and responsive, so consider the numbers as today’s reading.
Following, a sample of the model output: SPX on daily time frame, the day of the flash crash. The prompt reaction is nicely foreseen, as it then happened. And yes, in the days before the flash crash, the model was firing accumulate signals in the 2380/90 area, as it revealed correct.