The Clearest Elliott Wave Patterns – December 2021

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.