Stock Topping Process 03-29-21

Today the Dow Jones Industrial Average made a new all-time high unconfirmed by the other two main US stock indices, S&P 500 (SPX) and Nasdaq Composite. I call this a rule of the majority signal and could indicate a significant US stock market top.

The daily SPX chart courtesy of Trading View illustrates a possible Elliott wave count.

When the fifth wave of a five – wave motive pattern fails to exceed  the termination point of the third wave its called a truncated fifth wave.  This phenomenon occurs roughly about 10 to 15% of the time.  The problem with truncated waves is that they open the door for other possible wave counts.  Usually, they can’t be definitively determined until well after the fact.

A  significant peak in the US stock market may have been  made today. The uncertainty created by the possible truncated SPX  fifth wave warrants caution before  committing to short positions.

It’s not necessary to catch the top tick when shorting.   Let’s see if there’s more definitive evidence on 03-30-21 before taking action.

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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