In Elliott wave theory the most powerful bullish or bearish formation is referred to as a series of “one’s” and “two’s.” In a bull market, using standard technical chart patterns this would be a rally followed by a base, then another rally/base. The rally after the second base is usually enormously powerful and dynamic.
The 30 – minute S&P 500 (SPX) chart courtesy of Trading View illustrates a textbook example of a series of “one’s and “two’s” in a bear market.
The break below what is illustrated as Sub Minuette wave “i” usually produces a decline much larger than the prior two drops.
To the left of the textbook example illustrates the action of the SPX after its 03/29/22 peak. The presumed SPX Sub Minuette wave “i” low also corresponded to a double bottom at 4450. This double bottom was examined in the 04/09/22 blog “Important Double Bottom and Top”. The double bottom at 4450 was an added bonus for the bears, a break below this structure by itself could have caused a sharp drop.
From a price pattern setup, the bears had everything going for them to smash stock prices down. As of 04/14/22 they’ve only managed a marginal decline below the important support at 4450.
In addition, internal momentum indicators – examined in the 04/16/22 blog “Bullish Momentum Signals – 04-14-22” show the bears are losing strength.
Fibonacci and lunar time cycles point to a possible bottom on either 04/14/22 or 04/18/22.
Evidence from three of the four market dimensions of; Price, Time, and Momentum are bullish.
Traders have an opportunity to go long 50% non-leveraged SPX related funds at the SPX open on 04/18/22.
Use a move below SPX 4315.00 as a stop loss on half of the position. If the SPX opens below 4315.00 – do not go long.
Use an SPX move below 4250.00 as a stop loss on the remaining half of the position.