Elliott Wave Principle - SPX - Expanding Triangle
I have been following the implus from the march lows and I know that i have been calling for a short since 2900ish, but this has been a pretty extreme impulse that has pushed the ABC correction to the max. As I have mentioned before the B wave can exceed up to 1.318% of the drop of wave A, which means that this will stall if it approaches roughly 3330. I think that we are at the top or very near the top and its a good place for a short position. If you take a short, a good stop loss is 3340 or something similar, as this would invalidate my count.
The interesting thing here is that we have an expanding triangle, which is a terminal pattern. This means that it will come back down and there will be a reversal soon.
As I have mentioned before, since the impulse from March follows a distinct 5 wave pattern, we expect a ABC correction on the way down, which I expect to reach 2600. It may stall out before then or even test the March lows. Remember that the shape of this correction will tell us how wave 4 will behave. If wave 2 is a simple ABC correction, expect wave 4 to be a complex correction (and vice versa).
My sentiment:
If you are paying attention to the news, there are some news catalysts coming, such as stimulus from congress (which may not happen before the recess) and the July report. JPow hinted that the numbers show stalling growth. It is hard to look at the current economic landscape and be at precovid SPX levels while there is more than 10% unemployment. The market is supposed to be forward looking and its obviously pricing in extremely optimistic outcomes for economic and covid recovery. There are defaltionary fears as well, as inflation is almost 0%, which can manifest into something extremely negative for equities. I don't think that will happen, but the amount of MBS and other forms of debt the Fed is buying will lead to the mother of all pumps as that money makes its way into the economy. I expect a massive wave 3 after wave 2 concludes.
As always, have tight and logical stops and enjoy! This is an exciting time to trade against the sp500, although it has been frustrating watching this impulse go to the extremes of each wave/correction and count.
The interesting thing here is that we have an expanding triangle, which is a terminal pattern. This means that it will come back down and there will be a reversal soon.
As I have mentioned before, since the impulse from March follows a distinct 5 wave pattern, we expect a ABC correction on the way down, which I expect to reach 2600. It may stall out before then or even test the March lows. Remember that the shape of this correction will tell us how wave 4 will behave. If wave 2 is a simple ABC correction, expect wave 4 to be a complex correction (and vice versa).
My sentiment:
If you are paying attention to the news, there are some news catalysts coming, such as stimulus from congress (which may not happen before the recess) and the July report. JPow hinted that the numbers show stalling growth. It is hard to look at the current economic landscape and be at precovid SPX levels while there is more than 10% unemployment. The market is supposed to be forward looking and its obviously pricing in extremely optimistic outcomes for economic and covid recovery. There are defaltionary fears as well, as inflation is almost 0%, which can manifest into something extremely negative for equities. I don't think that will happen, but the amount of MBS and other forms of debt the Fed is buying will lead to the mother of all pumps as that money makes its way into the economy. I expect a massive wave 3 after wave 2 concludes.
As always, have tight and logical stops and enjoy! This is an exciting time to trade against the sp500, although it has been frustrating watching this impulse go to the extremes of each wave/correction and count.
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