BarroMetrics Views: S&P Revisted 2014-12-01
This week should provide clues to tell us if the technical picture will align with sentiment. Since the breakout in early November, we have price action, below normal volume and range, but that has moved above the Maximum Extension, 2509 (basis cash). So, on the one hand, an Upthrust Change in Trend (13-week, quarterly trend) is still likely; and on the other, the move above the Max Ext suggests upside continuation.
If the 13-week sell is triggered, at the very least, we’ll see a 12-month line turn (currently the line change price is 1712.41). And, if my reading of the market is correct, and a 13-week Change in Trend marks the beginning of a sustained bear market (courtesy of QE), then we may well see move to the 1987 yearly bar, 340.45 to 216.88. This figure is based on previous bear markets correcting a 60-month [5-year] trend.
If an upmove is the result, then the minimum target is where Wave V = Wave I (Figure 1), this is the 2263 to 2128. This target is arithmetically calculated. A percentage calculation where Wave V = 100% of Wave 1’s magnitude, projects a target to 2412. This is around the area where arithmetically, Wave V = 2 x Wave I.
MRCI’s seasonal charts suggest that, this week, we should see an acceleration in upward momentum, with a slight correction, Dec 06 to 10, followed by an upmove to Jan 10-18.
Let’s see what the week brings.