[D-day] SPX: Like clockwork!
Elliott Wave Analysis | SPX CMP: 5929 | Dt - 7th Nov'24
Simple speak
Our prediction from the start of the week was
Speculation (#1) if Republicans Win
SPX rallies post-elections, reaching 6000(!) once again.
During the FOMC meeting, the Fed announces another rate cut, leading to a market sell-off and the beginning of an A-B-C correction.
It seems to be playing out like clockwork
Since Trump's win, stocks have rallied intensely, and 6000 for the SPX is now just 1.2% away
It is highly likely the SPX will touch 6000 today.
However, this is a critical juncture for the stock market. If the FOMC meeting causes markets to drop, it could mark the beginning of a significant decline.
According to Elliott Wave theory, the writing has been on the wall for a market Armageddon, with the Ending Diagonal pattern nearing its climax. If this decline doesn’t materialize by this week, or at the latest early next week, we may have to consider an alternate wave count.
Chart speak #1
Chart speak #2
Alternate count
Our confidence is still high for the primary count to play out. We will publish an Alternate count if it doesn’t break down by next week.
Previous update - 4th Nov’24
Elliott Wave Analysis | SPX CMP: 5728 | Dt - 4th Nov'24
Simple speak
Speculation (#1) if Republicans Win
SPX rallies post-elections, reaching 6000(!) once again.
During the FOMC meeting, the Fed announces another rate cut, leading to a market sell-off and the beginning of an A-B-C correction.
Speculation (#2) if Democrats Win
SPX remains muted, potentially retesting the ending diagonal trendline.
During the FOMC meeting, the Fed announces another rate cut, prompting a market decline and initiating an A-B-C correction.
Reason for this Speculation
We have anticipated a market downturn this week but were uncertain of the catalyst. It seems we may have identified a leading factor—bonds. The bond market is sending concerning signals, and the next rate cut may serve as a critical inflection point (e.g., see The Damped Spring Report).
There’s also growing chatter that a Trump win could benefit equities, at least in the short term.
Is Elliott Wave Supporting These Speculations?
Yes, both scenarios align with our original Elliott Wave count and our anticipated correction (which, for now, remains a prediction).
Speculation #1 has a stronger rationale:
The SPX chart has generally followed the Elliott Wave count, with one exception. It broke down before completing five waves, which may indicate a "Throw Over." Here, the recent break below could represent Wave 4, with an upcoming break above to 6000 as the Wave 5 top.
Speculation #2:
While the internal wave count is less clear, the overarching ending diagonal pattern remains evident, supporting this scenario as valid.
The long-term wave count is provided in the older posts linked below.
Chart speak - #1
Chart speak - #2
Previous update - 29th Oct’24
Tl;dr - Nothing new, SPX is headed for climax near the 6K region again. Charts are suggesting week of Nov 4th is going to be critical for a lot of stocks and the Index. Elliott Waves are known to predict direction of the price move in advance. Media finds reasons for those moves later. What will it be this time?
Simple speak
SPX chart has played out like we predicted in the last post. Intersection of 6000 and US elections date is acting like a magnet on the Charts (Blue Arrow on Chart #1)
Given the Ending Diagonal pattern, the odds are in favour of a correction. The question is, Why? What are markets expecting that would warrant a drop? Further action in Middle East? Losing candidate’s shenanigans?
Regardless, at this point it seems 6000 should be a big resistance for SPX and correction is on the cards.
Chart speak #1
Detailed analysis from the previous week below
Previous update - 22nd Oct’24
Tl;dr - SPX, will continue its march higher over the next two decades and hence calls of a recession don’t seem relevant. However, the market may see a significant correction post Elections based on Elliott Wave analysis.
AlgoChirp macro view
Simple speak - SPX, which has been in a multi-year uptrend, is currently in Wave 1 of Wave 5. There is significant upside still left to go in this Wave 5. Long term Investors (10 year+) should stay invested or continue passive contributions.
SPX Chart #1 - Ultra zoom out (Decades)
TA speak - Wave 5 impulse (red wave in Chart #1) for SPX started in 2009 after almost a decade long Wave 4. For this Wave 5, the Wave 1 of a lesser degree (maroon wave in Chart #1) is currently underway. As per Elliott Waves (EG12), Wave 5 tends to be equal to Wave 1 incase Wave 3 is extended, both in terms of time and magnitude. This tells us Wave 5 should run for another couple of decades, if not more. This ride won’t be linear and will be full of ups and downs (especially on smaller time frames), but long term investors should still see the value of SPX rise.
AlgoChirp short term view
Simple speak - Week of 4th Nov, 2024, is shaping upto to be a cracker. It seems markets may head lower post Elections. Various factors are suggesting this based on Elliott Wave analysis, which makes it a high probability setup.
SPX Chart #2 - Zoom in
SPX Chart #3
TA speak - Wave 1 (Black wave in Chart #2) that started in Oct 2022 is close to its termination. In its last leg, Wave 5 is forming an ending diagonal pattern (blue section in Chart #4). Once this pattern plays out, it should result in an A-B-C correction in Wave 2. These Waves (wave 1 & 2) are part of the ongoing decades long Wave 5 mentioned in Chart #1 above.
Important Note - Given how these charts are lining up, it seems Nov-5th is going to be a pivotal date. That is the date when (1) American Elections will conclude, (2) Wave (iv) in the Ending Diagonal pattern will likely reach its apex, (3) Apex of the Ending Diagonal pattern will reach a major resistance - 6000!!
If these counts are correct then SPX should roll over post Elections. Charts are indicating a strong possibility. We will see what events transpire leading up to that day. This is also a pivotal point for AlgoChirp as if the markets don’t correct, Alternate wave counts will warrant a deeper analysis.