Feb 4, 2014

S&P Wave & Cycle Analysis 2009-2014



In the post "Market prediction 2009-2014" published 17 months ago on TradingView.com I pointed out the possibility of S&P reaching the 1650 target. As we all see the target has been surpassed. Here I update the analysis with in dept detailed wave counting and projections. 

How did I set this target more than year ago? The 1.618x projection of the third wave (872.81 to 1370.49) was level of 1678 (the bold blue retracement). As described earlier in the forecasting page and backtesting this method in Stock Market Cycle And Market Peak Projecting proved to be relatively accurate in market peak setting. To be precise here I have counted the waves in details. Thus projecting the 3rd wave (from 1627.59 to 1806.55) of the last C leg gives target of area of 1806-1917 for the final wave 5, which coincides with the bull market peak. After recent sell off there is high probability that "the big" wave 5 of the bull market started 2009 has been completed. 

Bull market 2009-2014 peak
Bull market 2009-2014 peak

What's next? The most worrying thing, however, is that not only Elliot wave analysis flashes bear signal. The market cycle theory confirms that as well. Historically the average bull phase lasts on average 5 years. Currently we are at the fifth year of the bull market, so stay focused.

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Stock Market Cycle And Market Peak Projecting (1982-2014)



Here in this post I would like to show the accuracy of the target setting technique using Elliot waves and Fibo retracements.  It was described in earlier posts so here I will make back testing of the method.

As it appears market peaks could be easily spotted by projecting Elliot waves 1 and 3 using Fibonacci numbers. Keep in mind that there is certain error as the actual peak usually does not coincide exactly with the projected level. The suggested wave 5 level is indicative suggesting the end of the bull phase within a range around the suggested target level. That could be seen in 1987. The method projects market peak at 319.98. The actual was 336.06 followed by one of the most severe downturns on Wall street. If one had sold its holdings when the target have been reached, he/she would have avoided huge pain.

Next cycle (started 1988) shows that wave 5 target could be surpassed and there is extension to the initial target. The stronger the extension, the milder the bear market.

S&P peaks projection 1982-1994
S&P peaks projection 1982-1994

Market cycle and wave projecting 1994-2014

The market peak setting (wave 5) in the bull cycles started 1994 and 2003 was pretty accurate. The former target was 1554.28, while the actual peak was at 1535. The last target wave set to be 1561.96 while the actual was 1559. Current bull market is of most interest. The target of wave 5 was set to be 1679. However it was broken upwards. We are in 5+extension wave. According to additional analysis there is high probability that we've already seen the peak. See why here: S&P Wave & Cycle Analysis 2009-2014.


S&P peaks projection 1982-1994
S&P peaks projection 1994-2014
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This work with autor CapitalHubs.com is licensed under Creative Commons 3.0.