A common relationship within an Elliott five wave pattern is that wave "one" is equal to wave "five"
Minor wave 1 up from the SPX bottom at 1810.10 was followed by a Combination wave 2 that exceeded the orthodox peak of wave 1. In this case the measurement is made from the actual peak at SPX 2120.55. The growth rate from SPX 1810.10 to 2120.55 is 17.10%
When there is a wave "four" Horizontal Triangle the projection of the wave "five" termination point begins at the end of the Horizontal Triangle. Not the low point of the triangle, which in this case is SPX 2532.
Adding a growth rate of 17.10% to the end of the nine wave Horizontal Triangle at 2604.43 targets SPX 3049.78. This is almost an exact hit of the longer term main Fibonacci coordinate of 3047.33!!!
A cluster of Fibonacci coordinates in the SPX 3032 to 3079 area implies a powerful resistance area. It would take a lot of power to break above this resistance.
If this wave count is correct then the SPX has just begun a post trinagle thrust up for Minor wave 5. This implies a strong and steady rally into May 2018.
It is quite usual for wave a to be equals to wave c in a wave 4 ABC correction so even if the Feb 09 low is tagged or broken, the EW count is still valid.
jiukun
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If the trade war becomes serious, is it possible that SPX breaks down the support line and sharply drops?
markrivest
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Hi zhilin
It may take a few days. If the SPX breaks below the shorter term lows above SPX 2532, the bulls could still
put up a fight. I think 2532.00 is the capitulation point for the bulls.
Mark
jiukun
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Thank you for sharing. Nice analysis. But have you considered the trade war between US and China?
markrivest
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Hi @zhilin,
Thanks for the comment. If a trade war develops it will be bearish for stocks.
Usually stocks move ahead of the fundamentals, we could start to see early warnings of this if the SPX goes bellow
what I have listed as wave "I". Then if there is a move below the March 28th and March 23rd bottoms, this could
be a strong signal that something more bearish is developing.
The major support remains the February 9th SPX bottom. I stand by my prior writings that a
breach of SPX 2532 could trigger a crash down to the November 2016 bottom.
What happens next week will probably set the tone for US and other nations stock markets in the next two months.