Short S&P 500 based on cycles and Elliott

29 nov 2018

Moon cycles have been shown in academic research to be predictive. Recent price history of S&P 500 shows clear moon cycles with a bottom around the full moon. The moon cycle is also related to the intermediate cycle in Welles Wilder's delta methodology.

Elliott Wave theory would predict we are in correction wave. After eight years of a higher index the correction should be large. The decline labeled 1 is not sufficient. That means that the large and swift 3rd wave decline is coming. The current wave 2 might be over (a perfect 61% retracement) or it might linger a bit longer at this level. It is likely that the 3rd wave down will coincide with a growing moon.

2 dic 2018

Nota

The moon cycle will turn down Dec 7 (Friday), but that is a fuzzy date. The Buenos Aires truth in trade negotiations will likely give the market a boost early in the week. Right now the situation is very open. The index can move up to 2810 relatively easy, but if it moves above the five-wave Elliott pattern is no longer valid as drawn.

6 dic 2018

Nota

The market is very volatile and news-driven at the moment. We can expect postive as well as negative news before Christmas arrives. I would expect the index going down towards 2300-2400, but the path will be rocky. I have no clear opinion whether this will occur in December, January, or February. I still trust that the moon cycles will have some influence.

7 dic 2018

Nota

The index dipped and recovered yesterday. We are now at the top of the moon cycle. The market is now almos exclusively driven by interest rates (see positive correlation SPX500 and US10Y in red above). Yields have plummeted and are ready for a small recovery. However, the trend is still negative and I would suspect that yields would move down next week. Then the stock market will follow.

11 dic 2018

Nota

We will move lower towards (3). The key question is when; either now or the second half of January. This is based on the moon cycle.

There is a strong correlation with the 10-year yield. That is likely to continue. Since the yield has plummeted recently we might see a bounce up, but I don't expect that influence the overall trend.

18 dic 2018

Nota

Full moon approaching and we can expect a bounce up at the end of the week

21 dic 2018

Nota

Initially stated that fall would be more than 300. This has now occurred. Projection in chart is illustrative. Since full moon is happening on Friday, we are in for a bounce up one of these days. The moon has a stronger influence when emotions run high in the market.

26 dic 2018

Nota

38% retracement would take index down to 2080. I would have that as the ultimate target, but that would be for next year. Right now, the full moon passed and there should be upward pressure on prices for one or two weeks.

28 dic 2018

Nota

38% retracement up is 2520. That is a good target, but since the last two days have been so volatile we me might also reach the 50% retracement. I always use the index and not the futures when calculating Fibonacci ratios. Fibonacci ratios are psychological and it is the US market that counts, not what happens overnight in thin volume.

The moon cycles are scarily accurate at this point in time. Don't ask me why

1 ene 2019

Nota

FINAL UPDATE

I give myself five stars (out of five) for this forecast. I have provided a new forecast Dec 29. I will provide further updates there