SPX500 steep ascent. The SPX500 is currently building an accumulation area. Upon completion, an accelerating, steep ascending wave sequence may follow. The width of the accumulation area will be between 3754-3894usd. Then I expect an accelerating rising wave. This is called the finishing wave in fractal theory. In fact, it can be seen from the analysis that a "pair" of symmetric starting wave sequences can be built on the wave axis. If the idea is correct, the target price of the rising wave sequence is 4537usd
The fractal theory is correct. There is also 'reality-theory' catching up with this index and other stock indices. One inescapable reality is that the market is overbought i.e. priced beyond any realistic expectations of dividends and earnings. Markets built on hope, not infrequently collapse like a house of cards. We saw round one of that in Jan-Feb 2020.
meszaros
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@Captain_Walker, Thanks for the post. I agree with you. I would expect the collapse from higher (4537usd level)
Captain_Walker
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@meszaros, Are you already long on the S&P? if not what is your range for entry long?
meszaros
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@Captain_Walker, I am a long-term investor. I'm from level 2399usd to a long position inside. I've been holding it ever since. If I had to enter now, I would be in a long position above 3754.3. The SP500 is currently sidestepping as the dollar strengthens (correction phase). In the longer term, I expect the dollar to weaken (as I read your analyzes), we agree with that. That's why I'm waiting for the SP500 above 4000 usd.
Captain_Walker
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@meszaros, Ok. I understand in the context of your starting position.
On US Dollar, I saw the recent early indication of a trend developing north, so yes stock indices have stepped back a bit but not significant at this time. Even Gold and Bitcoin have taken a pause as the Dollar strength increases. What happens next with the dollar is a guessing game, cuz I don't own the future. The issue I wonder about is whether the dollar slide will continue or for how long.
My theory is that Bitcoin and stocks have become a hedge against the sliding Dollar.
The other issue is what I call a 'horizon effect' - that beyond which we cannot see. But there are some worrying projections beyond the horizon. Firstly the only thing this market fears is 'the virus'. Each news report of a new vaccine approval saw markets pumping north, as fear of the virus dissipated. The basic assumptions is that vaccines will save the world. That lead the gamblers to look beyond jobs reports, GDP and everything else.
Of course, one does not need to be a vaccine expert to know that whilst vaccines work on individual people, it may not solve the deep economic problems underlying forex and stock markets. Yes - vaccines weren't designed for solve economic issues but gamblers have been treating it in that way (from what I see).
I'll deviate a bit to focus on the UK approach to the virus. Basically the assumption is that vaccinating 14 million people in the over 50s age-groups by March 2021 will do the country great good. Nobody - I mean nobody - except me, has considered that the over 50s in the UK (some 25 million) were the most isolated and sensible people. They were not majorly spreading virus. It was the under 40s. There is no parallel tract to vaccinating the younger people who are most likely to spread virus. Nobody has therefore considered the 'unthinkable' that yet another more transmissible set of strains could emerge by March-April 2021. In other words scientists and ordinary people consider the virus as a static entity, when it fact it is 'fluid', dynamic and evolving. History has recorded that governments and scientific advisers have been lagging and that they have underestimated the virus.
While all that is happening, the current three or four main mutations of the virus lead countries to lockdown and self-isolate from other economies. That's no good for trade and the generation of GDP. Something is out of whack. Central banks are not the solution to GDP or unemployment (still rising but delayed in the figures we see). Our economic system cannot just forget about GDP and jobs (not that anyone suggested so).
Overall, I see economies burning down while stock markets are pumping north. There is a fundamental disconnect. I don't know when the next big correction will be. It could start tomorrow or in months as your chart shows.
Whilst 4520 at end of March 2021 might seem improbable to me now, I have deep respect for your methodology after your Tesla position.
meszaros
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@Captain_Walker, Thank you so much for this fantastic analysis. I appreciate your opinion, because almost 1 year ago you were among the first to accurately predict the emerging epidemic. I agree with your opinion on the economy. Currently, as I see it, the current stock and bitcoin fall is caused by the strengthening of the dollar. I expect the dollar to weaken further in the medium term (based on fractals). This, in turn, could provide an additional upside wind for stocks and minerals. The red line (in agreement with you) could mean the collapse. Then, based on my further fractal analyzes, I believe that the real rise comes only after that. The "wall of fear" will be steep and can last for many years. I’m not writing a future target price for SP500 right now because it would sound incredible, but I’m expecting levels above 100,000 usd on the bitcoin side.
Don_Knowles
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Nice idea, I agree with this and also would like to say this is likely the final uptrend especially with the upcoming dempression from Biden stimulus and FED printing all 2020. (not to be political). Do you think 4.5k area could be the reversal?
meszaros
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@Don_Knowles, Yes. Currently, this is my trading strategy.
Captain_Walker
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@Don_Knowles, There's stuff in the pipeline that will shake all stockmarkets - like 'wealth taxes' and inflation. Whilst I primarily rely on technical analysis, which is about sentiment, there is also reality. Sentiment is quite often divorced from reality. That's fine if one is following a trend of sentiment over a few weeks.
However, sentiment is always reigned in by reality. There is some real harsh reality coming. The question is how long can sentiment prevail? I wouldn't know. For me it's not about picking a price point, cuz I only aim to find a decent trend on a 15 to 30 min time frame in any direction, encased in a 4H trend.
The US stock markets are pumped up on the hot air of some $120 Trillion. That's largely about hedging against a crashing Dollar and gamblers betting on some utopia beyond COVID, that they absolutely cannot know about. In addition much of this is driven by algos, that don't care about value in the long term.
Whilst anything is possible where sentiment reigns, the big issue is will sentiment prevail into March to April 2021. Over Feb to April 2021, the true economic picture is likely to unfold for the USA. Nothing prevents the algos from short-selling - they'll make money both ways.