S&P 500 – Elliott Wave Count – 07-09-21

The 07/05/21 blog “The Next S&P 500 Resistance Level” noted that the next S&P 500 (SPX) resistance level could be at 4437.  This level was derived by comparing the growth of the SPX rally from March 2009 to April 2010 with the SPX rally since March 2020.

There’s another resistance level calculated solely from the SPX action since March 2020.

The daily SPX chart courtesy of Trading View illustrates a revised Elliott wave count for the bull move from 03/23/20 to 07/09/21.

On 07/09/21 the SPX reached 4371.60 which is a growth of 99.4% from the 03/23/20 bottom.  A  growth of 100% targets SPX 4383.92 

There’s  usually a price and or time relationships between waves “one” and “five” within Elliott motive waves. 

The presumed SPX intermediate wave (1) from 03/23/20 to  04/29/20 had a growth rate of 34.8%. Multiply this growth rate times the Fibonacci ratio of .236 calculates to a growth rate of 8.2%  Adding this growth rate to the presumed Intermediate wave (4) bottom at 4056.88 targets SPX 4389.54 – close to 4383.92.

If the SPX makes a significant peak in the 4380 area, it’s a bit of a stretch to claim that the rally from March 2020 has a Fibonacci price relationship with the March 2009 to April 2010 bull move.  This may not be necessary because the Dow Jones Industrial Average (DJI) already has a price/time relationship with the  presume Primary wave “1”.

Please see the 05/11/21 blog “S and P 500 – Detailed Elliott Wave Count”

The DJI rally from 03/23/20 to 05/10/21 was 285 trading days, close to the 286 trading days of Primary wave “1”. Also, the DJI 05/10/21 peak was one day before a new moon. 

The presumed DJI Primary wave “5” growth rate had a ratio of 1.251 to Primary wave “1”, close to a Fibonacci 1.236.

If the DJI does not exceed the 05/10/21 top it implies the termination of the secular bull market from March 2009.

Momentum indicators are very bearish as the SPX rallies into potential resistance. There was a new moon on 07/10/21. On 07/09/21 the VIX recorded a higher bottom vs. the SPX new all-time high.  These factors suggest at  the very least a short-term top is developing, its more likely a major peak.

Traders short 100% non-leveraged SPX related funds on the open of the SPX 07/12/21 session. Use a move above SPX 4470.00 as a stop loss on half of the position. Use a move above SPX 4510.00 as the stop loss for the remaining position.       

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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