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SP500 Stops For A Correction

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May 24 2021

Hello Traders and Investors,
Today we want to present you the chart of the SPX500, possibly the most known financial index in the world. Many believe that the only reason why such markets move is driven by the performance of the individual stock within the indices and their earning reports and dividends.
We, as Elliott Wave Analyst, like to stick to our technical analysis as we can identify patterns which repeat in time. In this particular scenario we were waiting for a wave 3 of Primary degree to be completed anytime soon, possibly not before a smaller pullback to complete minor 4 and 5 of higher degree wave 5(red 5 in the chart).

SPX chart from April 25 (twitter):


Back then we assumed that a larger correction was imminent and that as long as it would have been in three waves we were willing to turn bullish again. Eventually we obtained the completion of wave 5) and the higher degree Primary 3 and the sharp initial move down in wave 4 of Primary degree did not take long to manifest. We know that support is shown within the 3950-4000$ level so we cannot out rule the possibility of another move down(possibly a wave C) of higher degree wave 4) after the sharp recovery from Friday’s 14th session. It is also very common for wave fours to complete near the wave four of one lesser degree, in this case it would be Intermediate wave 4) (red 4) which is at around 3720$.

We would also like to remind you that in the event the SPX keeps on falling Elliott Wave invalidation level is at 3590$ which is where the wave 1 of the same degree is.

SPX Update from May 24th :


Of course not all of the patterns will unfold based on our expectations, but that's why it's very important to see the difference between good and bad patterns. Normally, the easiest patterns are the once that can be recognized immediately, the one that occurs within a higher degree trend. So on the chart above what we see is a pause on the way up, therefore we will expect trend to resume into wave five sometime in weeks or months ahead, which may last until Fed comes out with new policy actions.
 

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