SPX Elliott Wave Target Reached—Now What?

Focus: STRATEGIES

A lot of traders use Elliott Wave these days to look at charts and find good patterns to trade. Wave Trading points out why the recent SPX trend appears to be flashing a bullish signal.

Going forward I will try to keep my emotions aside since SPX is now inside the target box that should contain the pivot price that will establish the end of the corrective EWP off the September 14 high.

As you already know, for many weeks I have been discussing that the internal structure of the pullback in progress can only be counted as corrective, therefore price should be involved in retracing a Fibonacci retracement of the up leg from the June lows.

Once/if price confirms a bottom the intermediate up trend (From the 2009 lows) will resume within the incomplete “bearish” wave (X). So now only price can confirm or invalidate my scenario.

To make it easy: A multi-week/month bottom is never established right away, it needs to carry out a process that requires some time in order to have a completed EWP, which will occur with fear and positive divergences.

Obviously a catalyst is needed in order to accelerate the price reaction into a terminal pattern.

I can think of two potential news:

  • Spanish bailout

  • US resolution of the “fiscal cliff issue”

So now we need a market turmoil to begin the bottoming process (It will speed up the negotiations process).

Let’s go to the charts: By looking at the daily chart below, if you have basic EW knowledge, you should understand why I maintain a bullish stance.