The S&P 500 (SPX) appears to have completed an Elliott impulse wave up from the important 10/30/20 bottom at 3233.94. If so, we could expect to see at least a retracement of the movement from 10/30/20 to 01/08/21. If this bull movement is a wave “one” the most likely retracement for wave “two” is a Fibonacci .618. Also illustrated are two other possible Fibonacci retrace levels, .382 and .50.
Momentum evidence supports the Elliott Wave count. Daily Stochastic has had a bearish crossover in the overbought zone. Today 01/14/21 the daily RSI broke below the level made at the 01/11/21 bottom while price held above its respective level.
If the SPX follows the analogy with the penultimate top made in January 2010, a near-term drop could continue for 10 to 14 trading days falling about 8 to 9%.
Traders are holding short a 50% position of non – leverage SPX funds as of the open of trading 01/07/21. Continue to hold short.