One Last Rally! Elliott Wave Analysis And The Date Of The Top

By Christopher Diodato

In yesterday's post, I used Elliott Wave and Fibonacci analysis to conclude that in the short term, the market has bottomed.  If by this point, it has continued its decline, our next target is near 1368 in the S & P 500, which is already right around the 200 day moving average.

My longer term Elliott Wave analysis has said for some time that 1500 in the S & P should prove to be an extremely potent resistance level.  Now, given the current data, I believe that 1500 will actually be where the market ultimately tops before the market begins a downward slide into the next bear market.

Note the white, green, and blue lines all bunching near the 1500 mark on the S & P.  That would be a confluence zone, where the market will have difficulty breaking above.

Next, we look at time targets.  Zooming into the advance that began this summer, we compare the shorter term subwaves of wave 3.

The Fibonacci brackets label short term wave 1, during the first three weeks of June, and the expected area of wave, which I expect to begin this week.  Like short wave 1, I expect the move upward to be sharp, culminating with an overly bullish market sentiment and buying climax.  This places the date of the top, which could be the overall market top around November 13.

Until then, late cyclicals, healthcare, and consumer staples are still the best places to be.  Natural gas looks good too for an uncorrelated bullish play.

Happy trading!

Metrotrader (D) is one of the few practicing CMTs (Chartered Market Technicians) in the United States . The CMT certifies his knowledge of market timing and risk management approaches. He tends to look for broad market moves and take advantage of them with index funds. The strategy he principally uses is mostly quantitative, and, tested, and has avoided or capitalized on every major recession since the 1940s. He says the best way to make money is to avoid losing it in the first place.

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