S&P500 History may not repeat itself, but it does often rhyme.

21 mar

In the infamous words of Mark Twain, we are analyzing today the S&P500 index (SPX) on the long-term 1W time-frame. This is a cyclical perspective obviously, attempting to find similarities between past and present price action, in anticipation of projecting the trend in the near future.

As you can see, the index is replicating quite closely the 1W price action from June 2015 to (so far) March 2017. The 1W RSI Bullish Divergence led to a Bear Cycle bottom on the 1W MA200 (orange trend-line), then Rally 1 and first consolidation on the 1W MA50 (blue trend-line) before the Bull Flag (dotted Channel Down) that led to Rally 2. Based on the overbought 1W RSI, it appears that the index may entering a short-term pull-back period.

If it continues to follow that pattern this closely, don't expect that pull-back to be considerably greater than -3.15%. Technically if the 1W RSI breaks below its MA (yellow trend-line), it will be time to start buying again for Rally 3.

By early 2025, it should be closer to the 3.0 Fibonacci extension, which gives us a rough target for our buying at 6500.


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