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US Stocks at Critical Inflection Point: Will Established Trend Persist?


A look at the long-term bull and bear Elliott Wave counts.


The market faces a similar situation now, and there's really nothing in the current chart to say that one outcome is higher probability than the other. I've outlined the bear pattern in red, and loosely outlined the bull pattern in green. As I've been talking about for the past few updates, this appears to be an important inflection point for US stocks.

Click to enlarge

Let's take a look at this chart from another angle. Below is the S&P monthly chart -- notice on the monthly, SPX is head-butting the upper line of the long-term trend channel (black), and approaching the upper boundary of the very long-term channel in blue ("approaching" in a relative sense -- still a ways to go). This chart suggests there should be some resistance near current levels.

The second challenging feature of the current market landscape comes courtesy of the fact that S&P has now reached February's "bear" count target of 1750 +/- and is in the territory where it could complete the c-wave of a very long-term expanded flat. This means that the long-term counts have come to a fork in the road: Earlier in the year, both counts pointed upwards, but that's no longer the case.

Click to enlarge

Near-term, the main significant feature of this chart is the so-far successful back test of the breakout over the rising black trend line. It's hard to be terribly bearish as long as that holds, but one there are two things which are less encouraging for bulls: one is the very choppy, overlapping rally since the back-test; the other is the fact that the rally since (4) has been unable to hold above the blue (2)/(4) trend line.
No positions in stocks mentioned.
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