The S&P 500 (SPX) action into the 10/13/14 bottom reveals clues that the decline from the 08/16/22 peak could be part of a larger developing Elliott wave pattern.
The daily SPX chart courtesy of Trading View illustrates Fibonacci price and time relationships.
The SPX rally from 06/17/22 to the peak on 08/16/22 took 40 – trading days.
The SPX decline from 08/17/22 to the bottom on 10/13/22 was 40 -trading days, a Fibonacci time ratio of 1/1 or equality.
Additionally, the rally from 06/17/22 to 08/16/22 was 688.41 points.
The decline from 08/16/22 to 10/13/22 was 833.70.
The ratio of 833.70/688.41 equals 1.211. The most likely Fibonacci ratio of wave “B” to wave “A” in an Elliott wave Expanding Flat correction is 1.236.
The blog “Support Break – 10/11/22” noted that the SPX move to a new low on 10/11/22 invalided the Elliott – Expanding Flat wave count. This was a premature statement because there is a low probability wave count in which a developing Expanding Flat from the 06/17/22 bottom could still be valid. Depending on near – term market action, this possible wave count could be examined in detail sometime next week.
The SPX – 15 – minute chart illustrates short-term action.
The prior blog noted there was trend line and Fibonacci resistance in the SPX 3,688 area and noted ”If the bulls can overcome this resistance it could extend the SPX rally for several days or even several weeks.”.
On 10/14/22 this resistance was decisively broken, subsequent to the early session top the SPX traded down for the rest of the day. The low of the day was just above the Fibonacci .618 retracement of the 10/13/22 to 10/14/22 rally.
If this short-term support holds it could lead to at least a multi-day dally. If the .618 support is broken the SPX could retest the 10/13/22 bottom.
The next blog will update US stock market sentiment and momentum evidence.
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