This Sunday evening at 7:30 EST, before "The Week Ahead With UPB," Chris will be hosting a webinar for diamond members only on some key changes in the stock market since Bernanke began hinting of possible tapering in the coming months. With the FOMC news this Wednesday, you should definitely stop by. We will be recording this webinar and posting it in the forum, however, if you cannot come. To register, click here!
By Christopher Diodato
To get the week started, let us take a quick look at the short term charts of the S & P 500.
This pattern, since the top in mid-September is called an Elliott Wave “flat.” To those seasoned in technical analysis, the pattern is essentially a double top that usually breaks down and then reverses back up.
If your eyes are glazing over already, this is what you need to know. Flats almost always occur right before a market is about to reverse. A “complex” and sideways correction often represents accumulation in a bear trend or distribution in a bull trend. That means now, distribution is occurring, but there is still one last rally in this market!
Now back to wave counting. I place us near a short term bottom, especially with all of this churning. I was attempting to pick a potential bottom target a few weeks ago. Specifically, I was watching the 161.8% extension of the first downswing from the yearly market highs. I marked 1402 on the S & P as a target. The target was 13,050 on the Dow Jones. Note that both targets have already been reached. That means that, into next week, after maybe some initial flopping or even a weak decline to 13,000, the market should continue to rally.
Here is the Dow & the S & P 500.
I’m sure that by now, you noticed the blue square at the top of two of the pictures labelled “Market Top Around Here.” What’s the specific target? For that, make sure to come back tomorrow. And if you have not already subscribed, make sure to do so!