SPX500 ELLIOTT WAVE JULY 31 2020 UPDATE

CNN Fear Greed Index: 64; previous close: 62; Week ago: 63

The overall technical picture is mixed. 

Daily technicals are bullish.  +Di is at 8.4 and the ADX is at 20.25, which is barely trending positive.  Also, volume is favoring the upside with the CMF averaging +0.19406 the last 20 days.   And price is 7.9% above the 200EMA.  There is no doubt that momentum and trend is favoring the upside. 

However, the wave form is telling us another story as the CNN Fear Greed Index put hit 64 today. Last week it was at 61. This is not too greedy but still is. Remember that this is a contrarian indicator. When the wave wave form is at the end of a bullish pattern, as the SPX is now, and sentiment is at an extreme it warns of a reversal. The CNN Fear Greed index tracts 7 financial sentiment indicators covering put/call options, Junk bond demand, stock price strength, market momentum, safe haven demand and Market volatility. This indicator oscillates form 0 to 100. 0 being the most extreme fear and 100 the most extreme greed. So a 64 out of a 100 is greedy but not at an extreme yet.

The advance from the March 22nd low has retraced most of the fall from the 3397.35 Feb all-time high.  The pullback took the form of a Minor degree zigzag.  

Five clear Minute degree waves can be seen on the run up to Minor-A at the 2972.91 Apr high.  Minor-B only retraced to the 23.6% BvsA but did so in a complete zigzag.

The ensuing rally took the form of an ending diagonal series, and it appears the ending Minor C wave is complete at the 3293.15 for Intermediate-(2). 

Price, however, is still hanging out near the July high.  The ending series could move up one more time leaving Minute-iii at the July 22nd high as it heads to complete Minute-v at either the 114, or 127.2% retracement of Minor-iv, which would then be at the 3200 lows. 

The Elliott wave form is telling us the risk is to the downside despite the bullish technicals.  However, the technicals are bullish and not at extremes which warns of more upside movement.  

For Intermediate (2) confirmation, a drop below diagonal 4 is needed.  Since this diagonal has taking so much time to form and because Minute-iii is just barely over Minute-i, I would like to see a drop down below Minute-ii at the 2935.88. for Intermediate (2) confirmation.

Deja una respuesta