- Elliott Waves
- Elliott Waves Explained
- Elliott Wave Magic Illustrated with Wave Charts
- Elliott Wave Edge – How Elliott Wave Traders Win
- Fibonacci Number Series and Elliott Waves
- How to use Fibonacci Ratio Retracements
- Elliott Wave Books
- Ramki’s Watchlist
Technical analysis on S&P500 using Elliott Wave Analysis including charts, Fibonacci ratios
On 8th April, we saw the possibility of the markets moving higher as part of the final leg of an Ending Diagonal Triangle in S&P500 index. As the attached chart shows, this up move has materialized. The question now is should we put on short positions around the current levels?
One of the key take-aways from Elliott Wave Analysis is that there is an underlying harmony in the markets, even though it appears chaotic while the moves are happening. It requires some effort to determine where the likely pressure points are, and a lot of guts to stake some money when those levels are reached
I read the following in Friday’s FT and thought it is useful to quote here. “History provides some useful benchmarks. After the horrible 1973-74 bear market, equities traded up, though unevenly, until 1982 with six specific bull runs that generated an average 32 percent gain”…but, a buy-and-hold strategy over that time period yielded only 9% compounded annual gains, which merely kept pace with inflation.
If my analysis of S&P500 (and Nasdaq) suggest that we will get a 5th wave move down, then how can I recommend buying Citi from $11.54? This is a valid question, and any good analyst should have thought that through. What I did, instead, was to look at the index and the stock separately.
On November 3, a day before the US election, I wrote that the S&P index was still in a downtrend and we should use any recovery to the prior high of 1045 to get out of longs. I also suggested that should we reach 1136, we should turn short there. As it turned out, the high was only 1005.