The cash S&P500 formed another downtrending price bar on the weekly chart but closed higher. As shown in the chart we found support at the confluence of the short (red) and medium (blue) moving averages. This support coincided with that previously shown on the daily chart. This week’s price bar was a “Reversal Bar” and the price pulse downwards from the 1576.09 all-time high ended at 1489.56. A new upward pulse began at this weeks low. Finally, note that the all-time high is now a price fractal (marked by the small blue diamond).
We now have four distinct price pulses up from the August low and have begun the fifth. My best bet at an Elliott Wave count is that the completed pulses are associated with waves “i-ii-iii-iv” of a five wave impulse pattern that; when it ends, will be ending an even larger five wave movement. The Fibonacci and Gann (green lines) targets derived from the weekly chart are shown. Target ranges for wave “v” are 1597-1603, 1624-1627, and 1658-1665.
Timing, for me, is always harder than price. My best estimate at this point is November 28 – December 7.
In last weekend’s posting I spent a bit of time talking about the bearish divergence on the weekly chart between price and all the momentum indicators I follow. If we are now in wave v of an even larger fifth wave then these divergences will come home to roost when v of 5 ends (early December?). I will return to these divergences in each weekly post until they are resolved.
Bottom Line: Although trouble may be bubbling under the surface it appears that at least one more push to new highs is underway. For me, the tricky part will be to find a position to get long. More on that in Monday mornings post.
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