S&P 500 Could be Basing For a Year End Rally – Part Two

The prior blog noted the S&P 500 (SPX) could be forming an Elliott wave – Horizontal Triangle correction which could be the  prelude to a year end rally . 

The SPX – 60 – minute chart courtesy of Trading View updates the progress  of the presumed Horizontal Triangle.

The supposed Minor wave “C” declined deeper than expected, and if complete was 80.7% the size of Minor wave “A.”  Most of the time  there are Fibonacci relationships  between the alternate waves of a Horizontal Triangle.  For example, wave “A” to “C.”   While  Minor wave “C”  does not have a Fibonacci relationship with “A” ,  80.7% is not a Fibonacci ratio.   Wave “C” could have a subsequent relationship with Minor wave “E”

The  time span of the supposed wave “C” was  only 16- trading  hours. Minor wave “A” lasted 58 – trading hours – a ratio of 16/58 = 27.5%.  The decline was much briefer than what usually happens relative to wave “A” and lowers the probabilities that wave “C” is  complete.  Its possible the bottom made on 12/20/21 could soon be tested.

The SPX 3-  minute chart  reveals  clues  that  a  decline of at least 1 – trading day could develop.

It appears that a  Minute wave degree – Horizontal Triangle formed in the mid – section of the supposed Minor wave “C” – which  is where  a correction of the decline is  likely to occur.  The rally off the 12/20/21 bottom climbed  into the apex of the Horizontal Triangle.  This  chart resistance is  a  logical area for the rally to halt.

Additionally, just above the apex is the Fibonacci .618 retrace of the 12/16/21 to 12/20/21 decline.  These two factors  present a formidable  short-term barrier and implies  the SPX could decline in the next one or two trading days.

A  move  below the 12/03/21 bottom in the next few trading days  would eliminate  the Horizontal Triangle wave count.   

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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