AndyM
Short

SPX update, bearish leading diagonals vs overwhelming optimism

FX:SPX500   S&P 500 index of US listed shares
344 3 15
Hi All,

This is my view on the latest development in SPX             . I suspect we again are dealing with a leading expanding diagonal, trying to pave its way down, breaking through a wall of massive optimism.

The role of a leading diagonal is to resist the trend change to the latest possible stage. Waves 1-2-3 are viewed by the market as a mere correction and are deeply retraced by wave 4, which, if fails, gives rise to a more powerful wave 5. So, the inflection point in the level of confidence in the old trend occurs at the end of w4. And it's because of this twisted behavior the leading diagonals are usually expanding, while the ending diagonals are contracting (there the confidences in the current trend grows steadily from beginning to end).

In our case, if 2096.5 is not bettered, then we will see wave 5 of the leading diagonal which should bring us slightly below 2000, as shown on the chart. This will complete w1 of a larger degree decline in wave C of w5 of a larger leading diagonal. The invalidation point of the scenario is 2096.5 - breaking back above this level will require us to revisit the labeling.

The final target for the decline is around 1730, but I am beginning to suspect that 1550-1600 may also be possible, given such a degree of optimism in the market.
raeel
a year ago
Your idea's not correct. It must be so ... ))
snapshot
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echo_wisc
a year ago
I think maybe it will be in the range 2040 - 2010 for longer time (before fed) and then choose direction and break out. When do you think is the target time for 1730?
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raeel echo_wisc
a year ago
may be, everything may be. I see all cry that fed will increase the rate, but the chart doesn't follow that. I think the rate won't change. else there is a short position.
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