Monday, September 19 2016

Terminal pattern at S&P 500?

The pattern unfolded by S&P 500 since February’s minimums resembles a terminal pattern. Fibonacci’s relationship between the fifth and third waves of a terminal pattern, as long as there is no failure of the fifth wave, tends to be between 61,8% and 100%, although the most frequent situation is the failure of the fifth rather than the equality of these two waves. The projection of the 61,8% is at 2244.

The correction that follows the exhaustion of terminal patterns is, as we already know, equal to the 100% of the pattern’s price development, in less time than it took to form.

S&P 500. Daily chart.


Following Elliott’s classic theory, the most probable relationship between waves one and five of an impulse pattern, like the one S&P 500 is unfolding from 2009’s floor, is equality or 61,8%, that, as we can see in the weekly chart, also projects to 2244.

S&P 500. Weekly chart.


October is just around the corner, and we know it is a month that usually shows some floors. In the monthly chart we see a bearish divergence with failure at MACD forming. This should be took into account, because although S&P 500 shows a bullish trend, if confirmed, we would see an abrupt fall of S&P 500 to February’s levels.

S&P 500. Monthly chart. MACD.



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