Just like almost all other markets, the S&P 500’s collapsed after the British referendum results last week, as well. The political and economic uncertainty is not going anywhere so most might think the index was supposed to continue much lower. Well, the market did not think so. The S&P 500 bottomed out at 1990 and climbed to as high as 2100 just for days later. It turns out the market did exactly the opposite of what common sense was suggesting. That is why instead of common sense, we rely on the Elliott Wave Principle to prepare us for what is most likely to follow in the markets. This article is another proof of its forecasting abilities.
Before the markets opened on Monday, June 27th, our premium clients received the following chart.(some of the marks have been removed for this article)
As visible, careful Elliott Wave analysis suggested that regardless of previous week’s sharp and steep sell-off, the uptrend in S&P 500 was likely to resume very soon. In other words, instead of following the extremely bearish post-Brexit news, one should have expected the bulls to return. The next chart once again proves Elliott Wave’s superiority over news-following, despite the fact that, unfortunately, the latter is by far the most widely used trading approach.
It is true that the index formed a new swing low this week, but it was definitely no time for selling. And our premium clients knew that. They have been told that “the price action might get very slow and choppy, but the bulls remain in charge”. Well, a recovery of 110 points in four days is not exactly a slow and choppy price action, but the bulls definitely remained in charge. Instead of blindly following the news, regardless of what it is saying, we trust the Elliott Wave principle to guide us in S&P 500. Why don’t you?
