Several blogs have illustrated that the SPDR – Consumer Staples Fund (XLP) has had one of the clearest Elliott wave patterns since the March 2020 bottom. The 11/14/21 blog “Consumer Staples Fund on Track for Potential Major Top – December 2021” noted that XLP could have a major peak in the area of 75.46.
The daily XLP chart courtesy of Trading View updates the price action.
The presumed Intermediate wave (5) has clear subdivisions and Minor wave “5” appears to be under construction. XLP has already exceeded to 75.46 area and could soon reach the next higher Fibonacci resistance area. When measuring potential Fibonacci resistance after a large percentage gain its better to examine growth rates instead of points.
Intermediate wave (1) had a growth rate of 27.36%, multiplying the Fibonacci ratio of .382 to the 27.36 growth rate calculates a rate of 10.45%. Adding 10.45% to the Intermediate wave (4) bottom of 68.32 targeted XLP 75.46.
Using the next higher Fibonacci ratio of .50 to 27.36% yields a growth rate of 13.68% added to 68.32 targets XLP 77.66.
Narrowing the focus to the subdivisions of Intermediate wave (5) generates a secondary target. Since Intermediate wave (5) has not had a large percentage gain its appropriate to measure points.
Minor wave “1” was 5.06 points multiplied by the Fibonacci ratio of .618 equals 3.12 points added to the supposed Minor wave “4” bottom of 74.03 targets 77.15.
The termination zone for Intermediate wave (5) is 77.15 to 77.62.
The SPDR – Health Care Fund (XLV) also has a very clear Elliott wave pattern.
The daily XLV chart illustrates its progress.
Intermediate wave (1) growth rate was 41.7% multiplied by the Fibonacci ratio of .382 yields a growth rate of 15.9%, adding this to the bottom of Intermediate wave (4) of 124.50 targets 144.33 as a potential Intermediate wave (5) peak.
Zooming in on the progress of Intermediate wave (5) shows that Minor wave “1” had 10.84 points, multiplied by the Fibonacci ratio of .618 equals 6.70 points added to the presumed Minor wave “4” bottom of 135.38 targets 142.08.
The termination zone for XLV intermediate wave (5) is 142.08 to 144.33.
Both XLP and XLV could reach their termination zones before the end of the 2021 trading year. The actions of these two funds in the next few days could provide important evidence of a major US stock market peak.