Where Is Next Market Top For S&P 500?
By: Chris Guthrie
Published September 5, 2018
04:00 AM GMT
My technical analysis of the S&P 500 Index rolls on since minute wave 4’s completion. Where is the next market top for the S&P 500? This article will detail the answer. Don’t wait too long to read, as the current wave’s duration will be short with a stock market crash on the horizon. If you have followed my commentary, you are aware of my ultimate timeframe for the top of the market. If you are new, you are just in time. I recommend reading my previous articles if you have time. By my calculations, the market is still on track for the market top in November 2018. The level is yet to be determined, however, appears lower than the initial forecast of 3194.67. In fact, the market may fail to reach 3100. This is outlined in the chart below and will be covered in future articles.
Elliott Wave Theory Technical Analysis
Once minute wave 4’s bottom was established this afternoon, I began using derivative analysis to identify a potential market top resulting in the simultaneous end of minute wave 5 and minor wave 3. My technical analysis accounted for all the index’s movement during the entire intermediate wave 3 which began in late June 2018. Minute wave 5 began today at 2885.13. On average, wave 5’s movement has been:
0.70 times the movement of wave 1;
1.52 times the movement of wave 2;
2.00 times the movement of wave 4; while
Wave 3 is 1.87 times greater than the movement of wave 5.
Minute wave 1 moved 66.14 points. Wave 2 moved 59.99 points, wave 3 moved 114.01 points and wave 4 moved 31.37 points. Our levels of interest are 2931.43, 2976.31, 2946.10, and 2947.87.
Elliott Wave Theory Principle: the next set of movement target prices are derived from the correlation between retracement percentages of wave 2 & 4 and the extension percentage of wave 3. On average, wave 5’s extension of wave 3 has been:
2.59 times the percentage wave 2 retraced wave 1’s movement;
4.22 times the percentage wave 4 retraced wave 3’s movement; while
Wave 3’s extension of wave 1 is 1.60 times greater wave 5’s extension of wave 3.
Minute wave 2 retraced wave 1’s movement by 90.70%, wave 3 extended beyond wave 1’s movement by 181.68% and wave 4 retraced wave 3’s movement by 27.52%. Our levels of interest are 3070.31, 2931.95, and 2934.89.
We also keep in mind common Fibonacci percentages as potential retracement levels when determining future movement. It is important to remember one of the many Elliott Wave Theory Principles we operate under is that wave 5 does not always have to extend beyond wave 3. This means the index does not have to surpass 2916.50. However, we strongly believe wave 5 will surpass this point, mainly due to wave 4’s retracement of wave 3 being very small. Our Fibonacci levels of interest are: 2943.41, 2960.05, and 2973.51. We now have 10 potential points for the index to find its next top.
We use the same methodologies to project the days, minutes, and hours it will take for the wave to complete itself. Our ratios are based on 5-minute periods. On average wave 5 lasts:
0.74 times the length of wave 1;
1.30 times the length of wave 2;
1.87 times the length of wave 4; while
wave 3 is 2.76 times greater than the length of wave 5.
Minute wave 1 lasted 404 5-minute periods, wave 2 lasted 315 periods, wave 3 lasted 870 periods and wave 4 lasted 196 periods. We have estimated the top to occur between 11:15 AM EST on September 10, 2018 and 2:00 PM on September 11, 2018.
We have taken the initial 10 levels of interest and removed the four highest levels as outliers. The key levels of interest reside between 2931.43 and 2947.87. The top should occur in this range depending on the timeframe. The chart below displays a red trend line that has acted as key resistance for the index and could potentially do the same here. The trend line fails to break above 2940 at the trend line’s highest level in the prescribed timeframe on September 10th and 11th. We have confidence the index will reach the green box in the chart below. The range detailed above contains the green and yellow boxes, while all levels of interest make up the green, yellow, and red boxes. If playing this move up, I personally plan to sell once the index reaches the green box.
All forecasted movement discussed in this article can be tracked in the interactive chart below. Simply click on the play button on the right side of the screen and track the index over the next week. My articles will follow as we monitor the prelude for the next stock market crash.
My analysis could be wrong. This would be evident if the index breaks below 2885.13 prior to September 11th. This downward movement would most likely result because minute wave 4 did not end. If this occurs, only one target level of interest would change. The 2947.87 mark would actually move higher. This value would fall out the forecasted movement change and would not alter the overall analysis. As I previously mentioned, the trend line would most likely serve as strong resistance to a break above this level. If this low (2885.13) is broken, the timeline for minute wave 5 would shift to the right by a similar increment. For example, this low occurred around 12:20 EST. If it is breached around noon on September 5, then the target date for the end of wave 5 would shift one day to the right. This would shift the timeframe from September 10-11 to 11-12.
Disclaimer: I currently have long positions on SPY. I do not intend to enter additional positions at the time of writing. This article is for reference only and should not be solely relied on to predict future movement. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. You should not take a risk without fully understanding the system, market, and having established trading discipline. Make sure appropriate research is conducted prior to taking any risk in a marketplace. The author and Limitless Life Skills LLC do not have an interest, outside of the holdings disclosed, or relationship with the companies mentioned in this article.