My prior post noted a decline in US stocks was imminent. Today 01/15/21 the SPX daily MACD had a bearish crossover a few trading days ago the daily Stochastic had a bearish crossover. If the decline continues it may only last until the end of January or early February , this is based on a possible analogy with the SPX January 2010 peak. That minor decline lasted about two weeks and fell about 9%.
In jan 2010, have not broken the 2007 high. this time we have broken Feb 2020 high, so it might be different.
markrivest
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@sgtraderjon,
Hi I was not specific with my analogy comment. The growth rate of the March 2009 to January 2010 rally was almost the same as the March 2020 to January 2021 rally.
After the SPX January 2010 top there was a minor drop followed by a rally above the January 2010. Another peak was made in April 2010 followed by a larger decline.
I think the SPX in 2021 could follow the same path.
sgtraderjon
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@markrivest, Most people who just entered the market because they are really young or really old because they just retired believe that we just completed the REQUIRED crash in covid and we are breaking out to a new multi-year cycle. I think there is a 13 year cycle from 1987 to 2000, and then 2009-2021. There should be a few short years of drops and many long years of basing (shallow wave 1 with high percentage retracement like year 2009) before the next pop and many of us will not be alive to see it.
sgtraderjon
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@markrivest,
On a second read of your response, we will drop (which I believe) from now to some percentage down and bounce. You mean the bounce will exceed the 3829 high and go into a final higher high in april? Is it possible that the bounce do not exceed the Jan 2021 high and continue down ?
markrivest
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@sgtraderjon,
If the current SPX drop is just a minor correction, then there's a good chance for the SPX to make another new all-time high.
Yes its possible the next rally fails exceeds the current all-time high. There is no predestination in any market. Don't fall in love with a forecast.
Watch for market evidence and be prepared to change your opinion if necessary.
Hi Mark,
My skill level in EW is still very low. For the SPX, is this decline a short term with another push up into the final one at the 4xxx levels?
markrivest
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@sgtraderjon,
Hi
What you describe is the most likely scenario. I have a detailed Elliott Wave count of the SPX rally since 10/30/20 to the January 2021 high on my website.
The 10/30/20 SPX bottom is the most important support level. If within the next few weeks the SPX breaks below the 10/30/20 bottom it would imply a major SPX top could be in place.
If so, it opens the door for the SPX to decline 20% or more in 2021.