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Dr. Arnout Ter Schure
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In last week’s article, see here, I showed and explained one of my -reliable- “buy/sell the S&P500” indicators, as it had reached the “buy zone,” but no “buy the SPX500” signal was given. I concluded, “When it does give a buy signal, I expect it (based on the Elliott Wave Principle [EWP]) to be a good one that can last for many weeks and bring the index to as high as the low 4000s, which is my ultimate target for the current Bullrun that started in March last year.

Well, on Monday, the indicator gave a “Buy the SPX” Signal as it moved up and out of the buy zone. The index has since not looked back. I share this indicator daily with my premium major market members, and they use it to their full advantage.

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Figure 1. Market Breadth-based Buy/Sell Indicator in Buy zone, but no buy signal yet

Buy Signal given, how high can the S&P500 go before the next correction looms?

The buy/sell indicator does not predict how high or low the index can go, and for that, the EWP is the go-to tool of choice. Figure 2 shows my detailed EWP count for the S&P500 using the hourly chart and the daily chart with straightforward, technical analysis (TA) based symmetry upside targets. Remember, symmetry is essential for the markets; as I forecasted, mid-February SPX3950 would be an important top: see here.

Figure 2. Detailed EWP count for the S&P500 and simple symmetry upside targets for the S&P500.

All that is left is then a wave-iv and wave-v to end the rally that started in March 2020. But for now, let’s focus on the upside target zone. Namely, if we add the length of the September 2020 and the early-November 2020 rallies to last week’s lows, blue arrows, then we have symmetry targeting SPX4065-4125. Hence, both symmetry and the EWP point to a similar upside target zone. Besides, the index is back above the 10-day Simple Moving Average (10d SMA) as well as its 20d SMA and 50d SMA and has remained well-above the 200d SMA (solid green small arrows). Thus the index is in a 100% Bull market as all SMAs are also rising with the price.

Bottom line: I now have three individual and independent tools/methods pointing first and foremost higher and towards the same target zone/region (SPX4065-4185) for a significant top. Combining methods: EWP + TA + Market Breadth is, IMHO, one of the most potent ways of analyzing and forecasting the markets as it provides a weight-of-the-evidence approach. All three methods point towards the same: higher prices, and thus I must expect higher prices as long as last week’s low holds.

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