For the past couple years I have found the 218 day cycle to be significant. The chart of the SP500 index (SPX) below shows that almost every cycle inspired at least a short term trend change or acceleration. The next cycle is upon us.
The SPX roadmap provides my Elliott Wave counts. The first two large five wave formations are easy to see. The drop since 2002 is looks to be at least five waves down. I see the last several months as a complex formation trying to work off time before price decides which direction it will go. A downward break below the March low should take price down into the 400-500 range. An upward break should go to 1100-1300.
The chart of the big drop in 2008 has led to some interesting symmetry. The October 10 cycle low (218 day cycle) was 90 days from the January high forming and inverse head and shoulders. This failed to support price and a new low was made in March (one year from the 2008 low where price finished the first leg down from the 2007 high).
Then the next 120 days formed a second symmetrical head and shoulders with approximately 60 days on either side of the low. This base on base formation is often very strong and should lead to some significant gains. The 50 day moving average is near the 1×2 Gann angle and is a place to look for entering new longs. If price breaks through the 1×2 angle then I will have much less confidence that this current situation is bullish.
The linear Gann emblem below is a clean chart for viewing the action off the March low.
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Tags: Elliott Wave Analysis · Gann Emblem · Market Cycles · Market Outlook · RoadmapNo Comments
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