SP500 - 2 week correction followed by new leg up

1 May 2020

The SP500 shows a nice wave leg up, the big question is if this is the start of a new trend or just a correction. It doesn't matter for the short term traders, because this impulse needs correction first. Therefore a 2-week correction is expected to at least 2730 (previous wave 4) or 50% level (2650). Momentum analysis (see the red arrows on the StochRSI and the RSI) shows that we can expect a top around current levels and that the 5 waves up might be over. The same is true for the RSI which is reaching the 60 - 65 level, a level that often shows heavy resistance. We can speak of a bull market (bullish range rules) in this timeframe after market crosses this level up.

The leg down starting february 17 is impulsive, no question about it. The trend up from dec '18 leading to the feb 17 top is more questionable. There are two options for this leg up:
Option 1: Impulsive, a 5th wave of a higher degree impulse
Option 2: Corrective, a B-wave of an expanded flat

If option 1 is true, the bear run from feb 17 to march 22 does not complete the bear market. We can expect another big move down after the current trend up is corrected with targets of at least 2300.

If option 2 is true, the trend down from feb 17 to march 22 could be the C-wave of the expanded flat. The most bullish outlook that suits this scenario's is that the correction that we are seeing since 2018 is be over.

The way to answer this question is determining if the trend up from dec '18 to feb 17 is 3 or 5 waves. See the chart for my analysis.

23 May 2020

İşlem kapandı: hedefe ulaştı

Wave 2 is set, so target reached last week (see arrows).

8 Şub 2022

Not

Nice to see wave 3 target hit exactly as forecasted in terms of price. I was too optimistic in terms of time.