S&P500: Longer Term Bullish

Technicals | Dec 10 2020

Bottom Line 10/12/20

Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 3400 / 3200 / 2950 – 2800
Resistance Levels: N/A (all time highs)

Technical Discussion

Reasons to remain longer term bullish:
→ Elliott Wave count continues to have motive bigger picture
→ Support / resistance zone around 3400 continues to hold strong
→ higher degree Wave-[4] looks to now be confirming a major low back in March

So everything is continuing to look very positive across all time frames. The micro triangle has broken out higher which was to be expected. And post a very quick retest of the breakout zone, price has gapped higher and looks set to continue north and once again into new all time highs. U.S markets are certainly in a purple patch at the moment, with price action looking very robust across all time frames.’

Since our last review price has continued to push on higher. Yet it is now well overbought on our divergence indicator and likely in need of a breather soon for this strong uptrend to remain healthy. So we continue to monitor the possibility that a retest of the old time high area, which was a former resistance zone now potentially acting as support. It also sits perfectly within the 50.0% – 61.8% retracement of this immediate wave-(i) move north circa 3473 and 3417 respectively.

You will also notice tonight a slight change to the labeling on our chart, or positioning of the trend as we like to call it. Especially taking into consideration the need for symmetry from an Elliott Wave perspective. So we have moved the Wave-1 high from the beginning of June to the beginning of September. It certainly creates better symmetry for the 5-wave move overall, and especially in relation to how the intermediate wave-2 has formed. Adjusting this positioning does nothing to change our overall analysis though, which remains longer term bullish. So lets now see if we can get the aforementioned healthy breather over the coming weeks. If we do, it will be critical that the 3400 price zone continues to hold strong !

Trading Strategy

With our upgraded wave count, there is still scope for the pre Covid all time high zone circa 3400 to be revisited and retested as mentioned. In fact we would define such as move as being healthy to unwind a well over bought divergence indicator. Yet such a move, if well supported, would well and truly put us on alert to getting involved in an aggressive swing trade opportunity on the long side. We will keep it on our radar.

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