S&P 500 – Ready to fly to new heights?
Dear Traders,
the S&P 500 showed renewed bullish strength and is at a point where new highs could be on the horizon once again. This post will provide a short-term technical analysis.
Technicals Favor Upside Continuation
The S&P500 has produced powerful advances to the upside over the last two trading weeks. The many strong daily candle closes (at, or very close to the highs) is usually a signature of a wave 3 in action. This is quite plausible from an Elliott Wave perspective as the previous price action (within the two white converging trend lines) can easily be counted as a leading contracting diagonal. Combined with the powerful bullish momentum that followed this structure, a wave 3 scenario is becoming a prime candidate.
In addition, technical factors used within the SWAT system also suggest that further gains and new record highs are still on the cards:
- Price managed to maintain the 21 EMA band of the weekly chart as its support ever since the January 2018 meltdown. In addition the daily chart long-term and short EMAs also managed to maintain a bullish alignment prior to the latest bout of bullish momentum. This usually suggests that higher highs are still on the horizon.
- Divergence is another important validation element for a completed wave 5, which is not present on the main trend of the weekly chart as of yet. We are very likely going to see it form over the coming weeks, but at this stage we should expect for momentum indicators to produce increasingly stronger bullish readings again.
Even if the structure since Jan still requires some more sideways movements before it is complete (which i see as having lower odds due to the latest bullish price-action momentum), the way is highly likely leading upwards still for US equities, in spite of the fact that we are the very late stages of medium-term trend.
All the best along your trading journey
Hubert
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PLS share your count from corrective wave 4?
Hi Morris. I see it as a zigzag into the Feb 09 low, another zigzag into the Feb 27 high, and then an expanding flat into the Apr 02 low, thereby creating a double three (wxy) within wave 4. There is also an option that it could morph into a triangle still, but this analysis was giving more weight on technicals than on elliott waves alone.
Cheers
Hubert