SPX - EW suggests something is cooking, is it Elections or something else/bigger?
Elliott Wave Analysis | SPX CMP: 5823 | Dt - 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.