Time to forecast the quick run up

SP:SPX   S&P 500 Index
In addition to wave theory I have developed a line theory of sorts. I draw lines based on only two points to judge support, resistance, or potential trends. I personally do not call things a trend until 3 occurrences are observed so marking these lines based on two points are not a trend. I draw the following:
Red lines = Beginning of wave 1 to top of wave 2 generally contains entire impulsive wave.
Green lines = End of wave 3 of 1 to end of wave 5 of 1 generally gets end of wave 5 of 3.
Yellow lines = Beginning of corrective wave (A1) to end of wave C3 generally gets end of corrective wave (C5).
Blue lines = End of Micro 2 to end of Macro 2 or 4 confirms end to macro impulse.
White lines = End of wave 2 to end of wave 4, break beyond confirms impulse is over.

I have remained in the camp of still being in Intermediate wave 5 down for at least a few more weeks, but some of the Line Theory above along with Elliott Wave Theory has me thinking otherwise. There are two main reasons I believe Cycle wave A has likely ended.
1 - Some Elliott Wave (EW) theorists hold that Wave 4 cannot go into the same realm of Wave 1 which has now occurred as of Friday. Intermediate wave 1 ended with a bottom of 3886.75. While this level remained a solid resistance, it was broken on Friday and Intermediate wave 4 is now above it. While this is a principal or rule of EW theory to some, I have seen these broken multiple times in my studies that otherwise kept waves intact and I do not give strong consideration on its own.
2 - Two major breaks with my light blue lines. Minor 2 inside of Intermediate 1 to Intermediate 2 was broke on October 25. This would confirm the current impulse has ended. Second, the light blue lines from a micro 2 to a macro 2 or macro 4 are always downward when that is the direction of the trend Minor 2 inside of Intermediate 3 to the current position (assuming end of Intermediate 4) is nearly flat while barely downward in the moment. This is stemming from the Minor 2 top at 3907.07 to the current top of 3905.42. Monday will likely tip this line upward.
Here is the chart of my old theory with the two violations. If we are still in Cycle A and Intermediate wave 4, we have retraced 65.93% of Intermediate wave 3’s movement which puts this into the final quartile based on historical data.

New Theory - Cycle B
The only two things I do not like about this theory is that Intermediate wave 5 inside of Primary 5 would have been quite short at only 6 days. Granted this tied the all-time minimum length so its not impossible. Secondly, my early top estimates are around 4600, however, our recent gains have us moving so fast that we could hit that mark well ahead of schedule. Granted we will swing up in Primary wave A, down in B and then back up to our final top during wave C.

I plotted out the full length of the bear market back on July 4th (). At that time I forecasted the length to be around 813 from start to finish which would place the bottom around March 2025. I also plotted the bottom in October this year and next major top in the summer of 2023. On August 20th, I broke down what a bear market over 813 trading days would look like based on historical wave lengths and relationships (). Cycle wave A is was estimated to last around 25% of the length of Supercycle wave 2. This would place Cycle wave A ending around October 18th. As of now, the bottom was October 13th, which is only 3 trading days earlier than estimated. This implies the bear market bottom remains on track for around March 2025 for now. If we are in Cycle wave B now, this would mean the market is in Sub-Millennial wave 1, Grand SuperCycle 5, SuperCycle 2, Cycle wave B and most likely Primary A, Intermediate 1, Minor wave 4. The full short reference to this point is 152BA14. Total stats for Cycle wave A had it begin at 4818.62 on January 4, 2022. It ended 195 trading days later at 3491.58. By October 13, 2022, the market had dropped 1327.04 from top to bottom which was a loss of 27.54%.
Projection for Cycle wave B: Gain 1108.42 points over 190 days.

LENGTH: Based on waves ending in 152B, the models weakly forecast the full length of Cycle B to last 29, 39, 65, 143 or 223 days in length. 142 days is near early summer estimates around May 10, 2023 while 223 days lines up with the late summer 2023 estimate near September 5. Based on waves ending in 52B, the same lengths are possible with the addition of 117, 146, and 165 days. The most model agreement is 195 days which would tie the length of Cycle A and end around July 26, 2023. Lastly, waves ending in 2B provide strongest model agreement at 98 days (March 23, 2023) followed by 195 days again. Waves ending in 52B tend to comprise 21-27% of the wave they reside inside. If the overall larger wave is around 810 days (new target based on Cycle wave A length), 21% could make Cycle wave B 170 days long while 27% is 218 days. Even though waves ending in 152B rarely last the same length or longer than the wave A that precedes them, I will place the estimate at 190 days for now.

GAIN: Based on waves ending in 152B, the first quartile of movement retracement of wave A is at 51.30% while the median retracement is 71.43% and third quartile is 72.07%. Wave B has retraced 113.17% of wave A before which would present new all-time highs for the index if that occurred here. Waves ending in 52B have a first quartile retracement of 67.02%, median at 81.39% and third quartile of 94.28%. Lastly, waves ending in 2B have a reduced first quartile at 58.61%, median at 76.51% and third quartile of 88.81%.

FORECAST: For now, I am projecting a top around 4600 by mid to late July 2023. This would be a gain of 1,108.42 points, or 31.75% off the bottom, in nearly 190 days. Based on these projections I am plotting Primary wave A and wave B at the following locations.
PRIMARY WAVE A tends to contribute 12.5 – 61.93% to the length of the overall wave it resides inside. With an overall projection at 190 days, this could make Primary wave A 22 – 117 days long. The first quartile is 23.77%, median is 35.19%, and third quartile is 52.91%. That equates to day lengths of 45, 67, and 100 respectively. Wave As in generally account for around 25% of the waves the reside in. We will bump the estimated length to around 50 days which aligns with the final trading day before Christmas. The movement tends to contribute 24-156% of the overall move with the first quartile at 49.86%, median at 73.33% and third quartile at 89.84%. These find levels could place the next market top in 2022 at 3756.60 (already past), 4044.29, 4304.38, 4487.44, and 5223.26. At the breakneck pace the market has travelled in two weeks, a top around 4375-4430 is most likely.

PRIMARY WAVE B tends to contribute 8 - 50% to the length of the overall wave it resides inside. The potential lengths based on the minimum, quartiles, and maximum would be 15, 24, 41, 60 and 95 days long. Additional datapoints can provide more numbers when considering the historical relationships between waves A and B. Wave A tends to be at least twice the length of wave B pitting the potential median length of this wave B near 22 days long. When considering the first quartile relationship wave B could be longer at 66 days. There is a Federal Reserve meeting at the beginning of February which would be approximately 25 days into wave B and another in late March at 59 days into wave B. We will plot the bottom of B at the latter meeting for now as the Federal Reserve should be able to see some inflation improvement from the 2022 rate hikes and the legislative agenda of a new Congress. Wave B’s movement is likely to make up 18-45% of the larger wave which would take it to roughly today’s trading prices. Coincidently, in March 2023 this would be around the market’s current resistance line. The line that began at the beginning of the bear market with the second point at the end Primary wave 2 is roughly the same as the line from the end of Primary wave 2 and Primary wave 4. These have been resistance lines for the market thus far, but once we break above them, they are likely to become new support levels. This would see wave B lose about 600 points or 13% over 59 days in the first quarter of 2023.

These dates and levels will change as more data comes in from Primary wave A and line theory is plotted as well.

The final set of projections will be the intermediate waves inside of Primary wave A.

Wave 1 could last 5-10-13 days based on the quartiles and it is currently at 11 days. I project it to currently be in the final leg of Minor wave 5 with the Federal Reserve likely being the top and end of Intermediate wave 1 at 14 days long. The quartiles could deliver Intermediate wave 1 gains of 280-336-677 points. So far we have gained 413.84 which is above the median and we are not done yet. 677 points is possible placing the top around 4168 which is another 200 points up over 3 days. However, my line theory could place the top around 4030 which is just over 100 points from Friday’s close. Early guess is folks believe the Fed is taking a breather while my analysis is telling me they are about to do something unexpected set to temporarily shock markets.
Wave 2 could last 1-4-5-8-17 days based on minimum-quartiles-maximum. The ratio of wave 1 length to wave 2 narrows the field to 2-5-11 days long. I will plot it around 5-6 days for now. The market could be looking at a drop of 172-220-358 based on the quartiles for movement inside of the larger wave while movement based on 1:2 ratios points at quartiles of 295-367-452. I will plot around a 330 drop for now. This places the bottom the day after election day. The market will likely rejoice if there is guaranteed gridlock in Washington. This is a perfect place to begin an expansive wave 3 rally.
The data gets looser the more estimated variables deeper we get so I won’t get too specific yet. Based on contribution to larger wave, wave 3 could last 8-14-19-22-27 days. Based on relationship to wave 1 it could last 7-16-23-35 days and based on it relationship to wave 2 it could last 9-33 days. I will plot it around 17 days for now. CPI release would be 23 days deep so that is something to consider as well. The gain could take us up near 4300.
Wave 4 could see a drop down toward 4100 over 5 days before wave 5 finishes out Primary A before Christmas.

Ultimately the run up will not be close to sustainable which will finally force everything down where it belongs. The billionaires stating the economy is not in a good position will be correct soon, but lets enjoy the run up while we can.

All forecasts are based on analysis of past behavior. Prior movements are not always indicative of future movement. Develop the theory, test the theory. Do your own research. Nothing in this analysis constitutes advice. YouTube For More. Good luck!!

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.