Technicals | Jan 27 2021
Bottom Line 26/01/21
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] confirmed a major low back in March
→ bigger picture Grand Super-Cycle Wave-[ III ] now in the very early stages of development
‘Our wave counts have been constructed off the Great Depression lows in 1932, which in our view have culminated in a Grand Super-Cycle (GSC) Wave-[ I ] locking in at the pre ‘tech-wreck’ 2000 highs. So almost 70 years of price action with plenty of major bear dips of varying degrees along the way, making up the subdivisions before the GSC Wave-[ I ] high finally locked in.’
The above longer term view of the S&P-500 was outlined during our annual Big Picture Week last week. Even though the analysis of larger cycle wave counts is a complicated process, we do feel comfortable with what we presented here. With the secular bullish theme continuing within our daily chart analyses as well.
So back onto the daily chart tonight and we continue to believe that a Wave-(3) of [5] is evolving to the upside here. In recent reviews we have been concerned about the Type-A bearish divergence that has been lingering around for the past 6 weeks or so. Yet with each move north into new all time highs, as again witnessed last night, this negative divergence continues to weaken. Regardless of this, price is still well overbought. And as Wave-(3)’s do frequently subdivide into 5-wave patterns within themselves, it would be ideal to see such subdivisions start to unfold at some stage here as well. We say ideal as bullish markets to remain healthy require breathers along the way. Price action is still not indicating it is ready to do this yet. Yet when it is, a 7 – 10% pullback would be more than acceptable, and easy to endure from a trading perspective. We will continue to monitor.
Trading Strategy
‘Shorter term we continue to look for a minor dip, perhaps back down towards the 3550 – 3450 support zone as part of a Wave-(3) subdivision. And if this proves to be the case and the dip proves to be well supported when in this zone, then an aggressive swing trade opportunity on the long side will be considered.’
The above from our last review remains our strategy for the S&P-500. Yet while we are waiting, we do have 16 active trades in the Global Area with all but one now sitting in profit. Netflix was the latest addition which triggered last night via a gap open move north. U.S markets are certainly continuing to be very buoyant.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.
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