I would like to consider the possibility that the SP500 Index might carve out a higher high, based on a set of technical conditions I will define below.
First and foremost, the Predictive/Forecasting Model I use in the foreground of my analysis has defined a probable target, namely:
- TG-Hix = 1063.34 - 12 OCT 2015 (For those intrigued by numeral plays, you might perhaps enjoy the mathematical relationship of this relative to the fractional period)
This target is a qualitative target, or Qual-Target, which not only represents the highest allowable target by the Predictive/Forecasting Model, by also by its nature will tend to impose a reversal - not just retracement - as a counter-force against price.
Now, looking at the general gist of price action in terms of count, I have ascribed three degrees of scale to this monthly chart:
1 - A Cycle degree, denoted by the tail-end of a large multi-year impulse, denoted by circled points , and (here using the brackets to indicated a circle)
2 - An Intermediate degree denoted by the last impulse in parenthesed points (1)-(2)-(3)-(4)-(5), whereby point (3) carved the historical top and the reactive low in point (4) remains a tentative structure low, likely expressing the beginning of a based on its initial reactive, counter-trend impulse (Note: a ZZ is the only correction expressing its initial leg in a 5-wave form). Point (5) is thus pending.
3 - A Minor degree denoted by a completed impulse of internal minor points 1-2-3-4-5 of intermediate wave (3).
Note also that as a general rule, an extended 3rd wave is associated with an equality rule, relating Wave-1 and Wave-5 such that the two are equal in height (here, 237.42 points), such that Intermediate wave-5 is expected to reach 1044.87.
A 5-point geometry is nearing its entire cycle, expressed by Mr. Bill Wolfe's , where convergence of 1-3 and 2-4 Lines define a 1-4 Line, also known as the "Target Line" - This TL remains pending and quite proximal to a potential rallying.
First, let's propose that the recent Intermediate Wave 5 and Intermediate wave 4 hold the following Fibonacci relationship, such that:
Intermediate Wave 5 = 1.618 x Intermediate Wave-4 = 1035.49.
This Fibonacci based target (which is one that is quite standard and typically anticipated when relating these waves) comes near-alignment to above Predictive/Forecasting Model = 1063.34, and in even closer alignment with the equality-based intermediate wave-5 = 1035.49.
Whereas the Predictive/Forecasting Model stands as an independent element in the analysis, it is interesting to note that there is compelling evidence which can be made here to expect not only further advance in the SP-500 Index, but also a probable reversal at the 1035.49/1044.87/1063.34 cluster.
To be followed.
Predictive Analysis & Forecasting
Durango, Colorado - USA
LinkedIn: David Alcindor
Moving on up as forecast from this past October 2015:
David Alcindor, CMT Affiliate #227974
- Alias: 4xForecaster
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Note also that, aside from a RSI remaining well in the positive territory its corresponding position marks a retracement of intermediate wave (4) into the origination-tip of its one-lesser degree minor wave 4. This is a known EW rule of temporary respite in advancing price action:
This too should be brought into consideration of the overall analysis.
As SP-500 index and $USDJPY have tended to walk into pace with one another, then consider that $USD will likely carry its own index to loftier levels as well, thus affecting the major pairs accordingly.
Following is $USDJPY 4-hour chart, offering a potential mechanism of ascent to levels shown in the chart:
What I have note pointed out in the chart in terms of supportive Fibonacci-based evidence, is that cycle wave-5 (i.e.: circled 5) can be expressed in relation to cycle wave-4 such that:
Cycle Wave-5 = 1.414 x Cycle Wave-4 = 1065.42.
Hence, the overall cluster becomes even tighter via the support of this expression, such that:
1035.49 ~ 1044.87 ~ 1063.34 ~ 1065.42