SPX update: trend lining the advance since the October 2011 low

Trend lines can tell us a lot about support and resistance for individual stocks and the markets. Here I plotted the two main ascending trend channels that have been of greatest importance for the advance off the October 2011, SPX 1075 low. One set is green, one set is blue. (click to enlarge) ps: 1821 + 263 = 2084… the chart says 2064, which is of course wrong!

SPX trendlines 11142014

At the SPX 1821 low (made only a few days ago 😉 , well yes actually in market terms it is really not that long ago), the SPX found support at the lower green trendline. This past summer it topped at the upper blue trend line resistance, which it also did in the Spring of 2012, whereas it peaked at the upper green trend line in November 2011. So if we use the length of each of these two advance (blue and green lines, connecting the tops and bottoms) we find that from SPX 1821 an equal advance would target either around SPX 2040 or SPX 2065. This assumes the common EWT principle that 5th waves often equal the length  of 1st waves.

Given that in OEW terms the green line is a major wave, and the blue line is an intermediate wave, it may help us determine at what wave-degree the SPX currently is in. A top at ~2040 means IMHO a major 5 peak, and thus a Primary III peak. A top at ~2065 means, IMHO, a intermediate v peak, and thus a Major 3 peak.

Note that price is right now also at the black ascending trendline, which together with the descending black trendline forms a potential (bearish) megaphone pattern. The upper line was tagged yesterday upon which price reversed. In addition, albeit not shown, the 1.382x extension of Primary I (667->1370), from Primary II (1075) is at SPX 2048: 1075 + 1.382X 704 = 2048. Hence, there’s quite a lot of resistance in the 2040 area. In conclusion, the market is now at a decision point; roll over and correct big time, or continue higher and extend this puppy till kingdom come 😉

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2 thoughts on “SPX update: trend lining the advance since the October 2011 low

  1. One other alternative is for the market to mark time for a couple of weeks, then correct slightly (technicals have begun to weaken) just before a year end rally. We could then be headed for the 2200 area in the new year to finish PIII.
    Just a thought!

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