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Elliott Wave Reasoning in S&P 500

It was not the best start of a week for the S&P 500. The index opened with a bearish gap and continued a little further to the south, before finding support near 2064.50 and resuming the uptrend. And while the Doha oil talks failure can be used by mainstream media to explain the S&P 500’s behavior on Monday, how to justify the following sharp rally, which has been in progress for three days already? Fortunately, we do not need to, because the Elliott Wave Principle makes all the explanations and pseudo-reasoning irrelevant. To Elliott Wave analysts, the only important thing is the wave structure of the price action. And we can prove that with the following chart, which we sent to our premium clients on Monday, April 18th, before the markets opened.(some of the marks have been removed for this article)
s&p 500 30m chart 18.4.16
As visible, the Wave principle suggested the S&P 500 was likely to find support at the 38.2% Fibonacci level and reverse to the upside again for a new high above 2088. The methodology even provided us with a specific stop-loss level, which gave our premium clients an “entry around 2067-2070 and targets near 2090. As long as the invalidation level at 2061 holds…” Today, three days later, the next chart shows how things went.
s&p 500 20.4.16
The bears did the job early on Monday, by forcing the index to plunge to our entry area, where long positions should be initiated. Then, according to plan, they ran out of power before reaching our invalidation level at 2061, so targets near 2090 were still plausible. Yesterday, April 19th, the bulls not only managed to climb to the target of 2090, but also exceeded it by a large margin, since the S&P 500 rose above 2104. This is an example of a perfect Elliott Wave setup: a specific entry area, stop-loss and target levels and a risk/reward ratio of over 3:1.
As Warren Buffett once put it, “the investor of today does not profit from yesterday’s growth.” So, instead of constantly seeking for a reason to explain market developments post-factum, why not stay ahead of the news with the Elliott Wave principle?

What to expect from now on? What is the bigger picture saying? Is the S&P 500 going to continue even higher or the resistance near 2100 would turn out to be too strong for the bulls to breach? Prepare yourself for whatever is coming. Order your on demand Elliott Wave analysis now or pre-order the one due out next Monday at our Premium Forecasts section. Stay ahead of the news in any market with the Elliott Wave principle.



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