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

On 12/23/21 the S&P 500 (SPX) moved above the high made on 12/16/21, this invalidated the Elliott wave count illustrated in the 12/21/21 blog.  That wave count had the SPX 12/20/21 bottom as a supposed Minor wave “C” of a developing Elliott wave – Horizontal Triangle.  If the 12/20/21 bottom was wave “C” then the subsequent rally would be wave “D”.  To complete the Horizontal Triangle  there would have to be a correction of the post 12/20/21 rally  before the SPX exceeded the 12/16/21 top – the supposed Minor wave “B” of the Horizonal Triangle.  The rally since 12/20/21 has been so strong that even on intraday charts there’s no decline that could be  significant enough to be considered Minor wave “E” of the Horizontal Triangle.

The daily SPX chart courtesy of BigCharts.com illustrates  one of several alternate Elliott wave counts.

In this  Elliott wave count Minor wave “B” of a Horizontal Triangle could still be under construction. If so it implies the triangle could continue into January 2022 with a post triangle trust up in mid  to late January 2022.   

Some of the momentum evidence suggests the current rally could continue into the last trading day of the year 12/30/21.  So far only the upper line of  Slow Stochastic has  moved above 75% – the overbought zone.  MACD  while having bearish divergences,  there’s also a bullish crossover of the lines.  Only the daily RSI has a solid bearish message with several  bearish divergences.

On 12/23/21 the NYSE  advance/decline ratio was 71% advances to 26% decliners.  Nasdaq Composite had a ratio of 69% advances to 27% decliners. 

The weight of evidence from these external and internal momentum indicators is  bullish.

The 10/24/21 blog “Possible US Stock Market Top – December 2021” noted a major Fibonacci time cycle  targeting  a possible top in December 2021.

The 11/10/21 blog “Possible S&P 500 – Price Topping  Zone” noted potential major Fibonacci resistance in  the SPX 4860 to 4890 area. 

If the SPX  can rally into 4860 to 4890 on December 29^th or 30^th  2021 it could be a fantastic opportunity to go short.

There are traders from over 70 nations all over the world that have viewed this website.

To all – peace and happiness!

Mark