S&P 500 - Has It Topped?

The S&P 500 came within 7 points of the lower side of our target region of 2,867 this past Thursday and turned down hard, dropping 55 points on Friday. The S&P Emini futures contract hit 2,866 overnight into Friday and reversed sharply as well, resulting in a gap down in the SPX Friday morning that kept on going. This past Thursday afternoon we announced to our subscribers in our new Seeking Alpha service The Active Investor that we took a long position in ProShares Ultrashort S&P500 (SDS) at the high in the S&P 500.

So, is the high in, or will the S&P 500 be able to make another high before turning down? While either is possible, initial evidence that took the form of an impulsive move down off this past Thursday's high suggests the odds favor the top is in. However, to better confirm this to be true, we need to see the SPX retrace this initial drop, then take out the low, followed by taking out initial support zones at 2,770, 2,720, and then 2,613.

S&P 500 Daily Chart

Solid risk management suggests now that for anyone who shorted the high into Thursday that they exit shorts on a break over Thursday's high and look to re-strike short from higher. However, provided the 2,860 level holds, there is virtually no risk in this short position. This same advice would apply to those who hedged long positions.

Now, what's next for the SPX? The same target regions discussed in my article on March 14th, 2018 here on Seeking Alpha still apply, as follows:

This will then leave two possibilities on the table, both that resolve down, as follows:

• An ABC pull back into the 2,516-2,438 region, which will be a wave 2 against the entire move up off the Christmas low, which will result in taking out the all-time high; or
• A fast and furious C-wave down to the 2,357-2,187 region to complete all of Primary Degree wave 4, before then heading to new all-time highs.

In order to glean a comprehensive understanding of the longer time frame Elliott Wave count on the S&P 500 Stock Index, coupled with the Hurst Cycle Timing clues that we couple with the EW count, and other technical indicators, please review the in depth market video provided by Mike Richards of TimePriceAnalysis and The Active Investor.