Well, I kept hearing about the "end of the cycle" as made famous by Ray Dalio, so I decided to do some measuring on the good old S&P. Could we have hit the top of the market?
In measuring the fib targets, I decided to start Wave 1 at the lows of the 1987 crash. That seems to make sense as it's the beginning of the "information age". Also, each Primary Wave would then be approximately the same amount of time. Wave 1 being 1987-1999 with an ABC correction of 9 years. Wave 3 being from 2009 - 2018.
We've had 10+ years of beautiful "buy all the dips" Wave 3. What's fascinating is our recent high is very close to the 1.618 projection of Wave 1. If you know anything about Elliot Waves, you'll recognize that 1.618 is a prime target for the end of Wave 3. We hit it almost right on the button.
So what's next? I feel we will have a very sharp correction to the 2000 level. That's where major support is structurally and psychologically, and that's also where the .382 fib is - so that seems like a good target. Any lower and we could be looking at the .5 fib (1800 level) but that would be especially deep for a Wave 4. I think this correction will be bloody but also fairly quick since the first ABC took many years (rule of alternation). Geometrically, it seems that 2021 is a logical time for it to end (after the election makes sense).
Luckily, according to this count we will have more upside to Wave 5, so I don't think it will be necessary to buy a bunker just yet. However, I would be careful to swim with the tide which will probably be going downstream for the foreseeable future.
Best of luck and Happy Thanksgiving
In measuring the fib targets, I decided to start Wave 1 at the lows of the 1987 crash. That seems to make sense as it's the beginning of the "information age". Also, each Primary Wave would then be approximately the same amount of time. Wave 1 being 1987-1999 with an ABC correction of 9 years. Wave 3 being from 2009 - 2018.
We've had 10+ years of beautiful "buy all the dips" Wave 3. What's fascinating is our recent high is very close to the 1.618 projection of Wave 1. If you know anything about Elliot Waves, you'll recognize that 1.618 is a prime target for the end of Wave 3. We hit it almost right on the button.
So what's next? I feel we will have a very sharp correction to the 2000 level. That's where major support is structurally and psychologically, and that's also where the .382 fib is - so that seems like a good target. Any lower and we could be looking at the .5 fib (1800 level) but that would be especially deep for a Wave 4. I think this correction will be bloody but also fairly quick since the first ABC took many years (rule of alternation). Geometrically, it seems that 2021 is a logical time for it to end (after the election makes sense).
Luckily, according to this count we will have more upside to Wave 5, so I don't think it will be necessary to buy a bunker just yet. However, I would be careful to swim with the tide which will probably be going downstream for the foreseeable future.
Best of luck and Happy Thanksgiving
SPY retraced right to the .658 fib - a typical area algos use to pop stops above .618. Expecting an impulsive drop starting next week.