Three factors imply the rally in U.S. stocks since the 04/19/24 bottom could continue for at least a few days.
On 05/15/24 all three main U.S stock indices, S&P 500 (SPX), Dow Jones Industrial Average and Nasdaq Composite made new all-time highs. Today’s move invalidated a bearish “Rule of the Majority” signal made on 03/28/24 when the SPX made a new all-time high unaccompanied by the other two main stock indices. It will require another instance of only one main index making an all-time high to initiate a new bearish signal.
The 30 – minute SPX chart courtesy of Trading View updates its short-term Elliott wave count.
The SPX from the 04/19/24 bottom appears to be in a developing extended Impulse wave. If so Minor wave “3” could be complete at the 05/15/24 peak or complete early in the 05/16/24 session. If the wave count is correct, it implies a short – term drop followed by a rally to a new high. The extended five wave pattern could be complete as soon as 05/17/24.
The third bullish factor is the 30 – minute RSI which ended the 05/15/24 session deep in the overbought zone. Most of the time stock indices do not make significant peaks without at least one RSI bearish divergence. The maximum 30 – minute RSI reading supports the theory that the SPX could have a decline followed by a new rally high – presumably with a bearish 30 – minute RSI divergence.
The next blog will examine the SPX long-term Elliott wave count.
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