S&P 500 Waves - Bull thesis 3675, 2920, then 4200
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Here is my bull thesis for the S&P that I have been looking into.
- Wave 1 is dot com bubble.
- We completed wave 3 in Feb.
- Wave 4 was the March crash.
- We are now working to completion of wave 5.
However, we must complete the ABC correcitve wave following Wave 3. We are still trying to finish Wave B. The vaccine rally on Monday has given new life to Wave B as it now looks like it wants to achieve a full 1.236 extension both off the March low and seperately the Sept low. Both of these corrective waves have their 1.236 level align exactly. This would be an expand flat correction. It came very close on Monday by tagging the 1.146 level. The fact the market held strong all week makes me think it is going to take a run at the 1.236 level.
Next we need to complete Wave C. The questions is how low with this go? Expanded flats typically hit 123.6% – 161.8% of wave AB. Assuming the 1.236 ext and overlaying that on my trend lines, it looks like a good place for the correction to stop is the 1.618 level, which also turns out to be the 0.5 fib level of the March rally. That would be the most extreme correction. It would also be possible for it to be slower and give us a 1.414 correction around the March time frame, but that does not line up with any major fib levels.
After that corrective wave, it looks like it could be off to the races and 4200. That is a very bold prediction because it means the S&P will have to jump up to the next major trend line, which I think is possible as the S&P goes "parabolic" for the final Wave 5 push.
Here are all the key things in one chart
For reference, this is what the 1987 Black Friday market looks like. IMO, it looks very similiar to today in many ways. Back in 1987, there was not even a really economic cause for that crash. It took 2 years instead of 8 months. Today we are under crushing debt levels and a pandemic. Just goes to show you how crazy the current market.
For fun, here is a chart for the bears.
- Wave 1 is dot com bubble.
- We completed wave 3 in Feb.
- Wave 4 was the March crash.
- We are now working to completion of wave 5.
However, we must complete the ABC correcitve wave following Wave 3. We are still trying to finish Wave B. The vaccine rally on Monday has given new life to Wave B as it now looks like it wants to achieve a full 1.236 extension both off the March low and seperately the Sept low. Both of these corrective waves have their 1.236 level align exactly. This would be an expand flat correction. It came very close on Monday by tagging the 1.146 level. The fact the market held strong all week makes me think it is going to take a run at the 1.236 level.
Next we need to complete Wave C. The questions is how low with this go? Expanded flats typically hit 123.6% – 161.8% of wave AB. Assuming the 1.236 ext and overlaying that on my trend lines, it looks like a good place for the correction to stop is the 1.618 level, which also turns out to be the 0.5 fib level of the March rally. That would be the most extreme correction. It would also be possible for it to be slower and give us a 1.414 correction around the March time frame, but that does not line up with any major fib levels.
After that corrective wave, it looks like it could be off to the races and 4200. That is a very bold prediction because it means the S&P will have to jump up to the next major trend line, which I think is possible as the S&P goes "parabolic" for the final Wave 5 push.
Here are all the key things in one chart
For reference, this is what the 1987 Black Friday market looks like. IMO, it looks very similiar to today in many ways. Back in 1987, there was not even a really economic cause for that crash. It took 2 years instead of 8 months. Today we are under crushing debt levels and a pandemic. Just goes to show you how crazy the current market.
For fun, here is a chart for the bears.
Anmerkung
A better look for the bears.
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