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January 7th, 2022: SP-500 Chart Update

Posted by pugsma on January 7, 2022

6:30 pm EST: The SP-500 opened flat from 4696, dropped to 4684, rose to the day’s high of 4708, then dropped to the days low at 4663, rallied to 4697 and closed at 4677.

Key Market Comment: It’s possible now that the P1-C3 top is in place at 4819 on January 4th, 2022. An important technical indicator here is that the NYSE A-D Line Cumulative $NYAD | SharpChart | StockCharts.com) that failed to make a new high along with SP-500 and is now rolling over hard. This nearly two month long negative divergence on a key market indicator of underlying strength. The NYSE A-D Line cumulative almost always negatively divergence significantly a key market top. This can corrective itself, however it going to take very broad market rally of all sectors per the primary (white/green) wave count, which is calling for wave (3) of minor 3 move much higher.

Wave Counts: Things have gotten a lot more complicated here at the beginning for year 2022. There are now three wave counts in play. My policy for more than 10 years here, is not to replace the primary wave count when it remains valid. However, I believe that now that US Federal Reserve is likely to introduce quantitative tightening in Q2-2022, the base case (primary count) higher probability scenario is the alternate (blue) count ending diagonal for the conclusion major [5]-P1 below 5000 and the bearish alternate (red) count that P1 has already topped at 4819 has some reasonable probability here too.

  1. The original primary (white/green) wave count is calling for a powerful bull wave (3) of minor 3 or minor 5 of major [5]-P1 to start soon and move much higher (5331 target) for a P1-C3 top sometime in the summer to early fall 2022. The minor (2) wave might have competed at 4663, near the 50% Fib retrace of 4668.
  2. A new alternate (blue) wave count that can squeak out one more slightly higher high than 4819 as an ending diagonal major [5]-P1. The minor 4 wave of major [5] should be ending soon (above the 62% Fib retrace of 4618) and should lead to more higher high that 4819 for minor 5. This new slightly, higher high will likely be below the 5000 level.
  3. A new alternate (red) wave count that has P1-C3 topped at 4819 and the P2 correction to a 38% Fibonacci retrace of P1 down to 3821. The first minor 1 of major [A]-P2 wave looks to have completed at 4663 and after a minor 2 wave bounce to the 38%/50% Fibs of 4722/4742, the minor 3 wave down will break below 4495. I’m expecting the major [A]-P2 wave to reach the 4394 pivot. Note: A break below 4495 would confirm this alternate (red) wave count.

Have a great weekend !

SP-500 15-min chart:

SP500 Technical Analysis

SP-500 60-min chart:

SP500 Technical Analysis

SP-500 4-hr chart:

SP500 Technical Analysis

SP-500 daily chart:

SP500 Technical Analysis

SP-500 weekly chart:

SP500 Technical Analysis

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