Did the S&P 500 Just Peak at 1,356?
Evidence is mounting for a good-sized correction.
The S&P 500 hit 1356 today and put on the brakes and reversed down to 1341 in a possible terminal top move.
1356 actually has Fibonacci relationships. If we take the last major rally which was from the Summer 2010 lows:
1010-1370 (May 2011 highs)
.786 of 360 is 283 points
Take 283, add it to the 1074 October lows…. you got 1356/57.
That would mean this last rally so far is .786 of the 2010-11 rally.
Also, 1356/57 is right in my 1352-1376 pivot ranges for a Major 3 top as well.
My point here is that evidence is mounting for a good-sized correction.
Possible count, though many will argue is not valid:
Wave 1- 666 to 1221- 555 points
Wave 2- 1221-1010- 211 points, .38% of 1
Wave 3- 1010-1370 360 points, .61% of 1
Wave 4- 1370-1074- 296 points… 38% of 1-3 (A bit more than 38%)
Wave 5- 1074-1356 .786 of 3
Only rule violation here is Wave 4 would have delved into wave 1, which is a no-no for most E wavers. However, I would argue that 4 often does delve into the wave 1 arena and legitimately, but that is a topic for another article.
Nonetheless… pay attention to the Fibonacci relationships. If anything, they may be warning of 1356 as an interim high and top with correction starting. This would either be a fourth wave down with the fifth and final wave up left, or we topped at 1356. A drop below 1337 will confirm a correction at minimum to 1310 and then 1295 ranges.
Just food for thought…we have been lightening our positions and raising stops at my trading service.
Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service.
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