S&P 500 Continues To Push - But Not For Long

The move up in the S&P 500 off the Christmas low is nothing less than an astounding V-Shaped recovery, moving up over 550 points in 3 short months. However, the pattern off this low has all the markings of a corrective move up with lower levels still to come.

While the move down from the high established on March 21 best resembled a 5-wave structure, after having taken out this high yesterday it invalidated this potential as the high, thus suggesting that now the SPX will hit the higher targets we originally forecast.

From the low seen on 26th December ES appears to be in a W X Y pattern to the upside. This does have enough structure in place to count as complete or we can still see another push higher towards 2877 & then 2895. We will need to see ES trade back below 2726 then 2680 to confirm that this leg up is complete and we are either headed down below the low seen in late December OR a retrace against the move up from that low.

S&P 500 Emini Daily Contract

At this moment in time we are still expecting the lower targets to be reached. However, a move into the 2,950 region would begin to shift the balance of odds that the low is in, and we will be much more keenly focused on the notion that a retracement against the entire move up will hold in the 2500 – 2400 region as a wave 2 against the entire move up from December.

We will be looking for clues that the top is in to capitalize on the move down by purchasing shares of ProShares TR/Short S&P 500 (SH) or ProShares UltraShort S&P500 (SDS) where we post these entries in our Seeking Alpha Marketplace service The Active Investor.

Our Hurst Timing suggest a move down into the end of May to early June, followed by a move up into mid-July, followed by a move down into late October, 2019.

S&P 500 Emini 4-Hour Contract

Concluding Remarks

• The S&P 500 is in a b-wave correction off the Christmas 2018 lows and is still setup for a move to the 2,200 region.
• Upper targets are 2877 and 2895.
• A move over the higher targets will change the balance of odds to the entire move off the Christmas low as an initial wave 1, where we will be looking for a pull back into the 2400 – 2500 region to go long instead.