Corrections & Trends
By Bennett Tindle February 3rd, 2021
Last week we identified the makings of an ending, contracting variety diagonal with a price target of 3890 in the S&P 500. After reaching upside channel resistance and completing the diagonal at 3870, the S&P 500 reversed to the tune of about 4.5%. Unfortunately, only TWO of our THREE triggers were met, leaving us with a lack of conviction on the downside. In fact, I noted on Twitter that the correction unfolded in a 3-wave measured move fashion… Which is indicative of a correction, as opposed to a trend-establishing directional market reversal. In the world of Elliott Wave, 3-waves does not a trend make or break. We’ve since retraced a significant portion of the decline, which really comes as no surprise gave the lack of a completed 5-wave decline in the dollar, as well as the index heavyweights nearing the completion of sideways consolidation and ready for a ramp back to the September area highs. Moving forward I expect a re-test of the upside 3870 level in the S&P 500, with a targeted resistance zone of 3890 – 3920 prior to the larger correction setting in. Be sure to tune in as I walk you through the charts, highlighting how and why this trend extended.