I have had a bullish target of 2,500 on my S&P500 charts since July 6th 2014. The issue for me since then though has been whether we would see a test of the 1,600 breakout region again before that potential peak. I’m now wondering if a bullish move, up to somewhere near the 2,500 region, might continue to evolve before we get any pull back to test this 1,600 region. I still won’t be comfortable with any continuation move higher until we do get some sort of test of this breakout region but, as Mick likes to remind us, ‘You can’t always get what you want‘!
S&P500 yearly: this is a multi-year Log chart of the S&P500 since the 1930s and there is a bit of a pattern. I do believe that the 1,600 level is the new floor/bottom of the next long-term trading period for the index. This level was the top of the most recent 15-year range-trading period and the breakout from this range was triggered back in May 2013. Major breakout levels, however, are often tested before continuation moves and such a test can be seen on the previous 15-year channel. This 1,600 level has never been given a decent test though and hence my continual looking for just such a moment. I do contemplate whether the normalisation of US interest rates might trigger such a test or if the transition to a Trump style of government might send a few shock waves through the markets? However, irrespective of what might cause a pullback, I’m still on the lookout for one.
S&P50 monthly: this chart shows a section of the most recent 15-year trading range illustrated in the yearly chart above and the 1,600 breakout region can be clearly seen here. Bearish divergence warned of the last two retreats from this region back in 2000 and 2007 but the 2013 breakout did not display such a warning. There was some divergence after this breakout but this has faded for now. Note how my target for the ascending triangle breakout move up to 2,500 aligns with the Elliott Wave indicator projection. I am now thinking that this bullish ascending triangle breakout might move closer to completion before any potential re-test of 1,600:
S&P500 weekly: this had looked like a possible Bull Flag for some time and I’m watching to see if it develops at all.
S&P500 daily: there had been a smaller scale Bull Flag building here on the daily chart too and this looks like it could get going.
Summary: I am bullish over the longer term for the S&P500 and believe that the 1,600 is the new bottom for this future trading range. My concern, however, is that the breakout level of 1,600 has not been tested with any veracity and significant breakout moves do generally test these levels. Thus, I’m still on the lookout for a pullback to test near the 1,600 level but whether this evolves at all or if it might evolve before or after the completion of the ascending triangle breakout move (with a target of 2,500) remains to be seen.