Developing a Market Map - Part II

Step two in the process of finding price targets is to add the Gann targets to the Fibonacci grid developed in yesterday's post. The Gann prices are derived from the Square of Nine and are the thick horizontal green lines on the attached chart of the monthly S&P500 (cash). We are interested in where these Gann targets coincide with the Fib clusters. Our two best price targets for the anticipated "C" wave decline are shown by the blue boxes.

Next week we will work on the potential time targets.

Developing a Market Map - Part I

If one believes that a new significant price decline is in the offing then the first step is to develop a "roadmap" of where that decline will lead. Step one in the process is to look at Fibonacci retracements. More specifically, we want to identify areas of confluence in the Fibonacci targets.

Such targets are identified as the blue boxes on today's chart. Note that the location of these boxes does not imply a time target. That is work for later.

Momentum Fails as Waves Crest

One requirement to substantiate the view that a large "B" wave has ended on the monthly S&P500 (cash) chart is to have a "sell" signal on the momentum technicals. Today's chart shows just that. Notice that the popular RSI (the top most indicator plotted) shows the indicator rising along with the monthly price bars. This is bullish. HOWEVER, another tool used to track momentum does not paint this picture (the other indicator plotted). This divergence is our required sell signal.

Beginning or Ending?

Welcome to my humble blog regarding my market views. I start with a long-term Elliott Wave count on the S&P500 cash index.

As you can see by the chart, I believe that a downward moving "C" wave is beginning. This implies that wave "B" has ended. Bottom line: I would not want to be long equities at this time.

More to come!