SPY Reaches 2-year Final Target #3 (670) and Drops
Government Shutdown. New Highs. Now What?
Trading Fam,
I promised a video update this week. However, due to unforeseen issues with my streaming app, I have opted for a static post instead. Apologies, but I’ll go through updates on our chart, explaining where we are and where we might be headed next.
We’ll start here with the weekly. I want you to focus in on the yellow Elliot Wave pattern. All along I have stated that I am no Elliot Wave expert. However, I seem to have gotten it right this time ...at least so far.
The first wave starts around Dec. of 2018. We dipped harshly during COVID and that completed our wave (2). The third wave is often long and extended and we hit our top in Jan. 2022. Wave (4) then gave us our dip and the start of our Cup and Handle, seen in pink. I don’t know much but I do know wave (5) is often equal or greater than (3). I started looking for a final target for wave (5). My Cup and Handle soon offered that target to me.
So now let’s zoom into the daily:
You can see Target #1 was nearly hit. You’ll remember I sold here due to nearly touching that white uptrend. I waited for the dip back into support (RED) and re-entered, focusing on Target #2, which also coincided with price hitting that white trendline and being rejected. We bounced on that red support again and double-topped. This time, we broke through our red support and came all the way down to another support, which I expected to hold (white). It did. I then knew we were on our way to Target #3. But I’ve stated all along that I did not think we’d break back above that previous red support, which now has become massive resistance. So far, I have been right. The Cup and Handle pattern also gave me that 670-700 target. Nailed that as well.
Could we go higher? Absolutely. That’s what blow-off tops do. They often surprise the market with one final wild ride. Everyone piles in out of FOMO. And I have expected a final price of up to $700 SPY all along. Will this happen? Remains to be seen. But my experience has taught me that we are near the top. And since I am satisfied with a price of $670, being that this is the beginning of my third and final target box, I pulled most of my personal money out a few days ago. My main goal now is to avoid greed and preserve capital. That is what I will do until the market tells me otherwise.
I want to take one final look at our monthly chart:
See that thick white trendline that starts in 2009? That is the beginning of our secular bull market. This next part is going to sound insane, but that is often the case when you read what I write, we could technically drop all the way down to SPY 300, over 55% from where we are right now, and STILL be in a bull market! Can you imagine how many traders will start to scream that the world is ending? And yet, technically, the market will remain bullish. Crazy to think about, but definitely worth noting.
✌️Stew