Last week the financial markets reversed course again, amid global scenes of crisis and violence, to bid up a variety of risk assets. Our task is to consider the events in perspective, and try to draw out some direction for the week ahead
Read the full analysis here when it is published (Sunday in all probability).
For readers of this blog, a little something extra. I study charts of the major financial indexes on a continual basis. One can’t help but see patterns in the charts much of the time. Lately a pattern on the S&P 500 has been particularly intriguing.
I had mentioned before my curiosity about Elliott Wave analysis. While I remain unconvinced that there is a good level of predictive validity in this method, and wave counting seems too subjective to be of much use, I do notice these patterns when they appear. Consider the chart of the S&P 500 below. By my admittedly unprofessional count, it could be that the current corrective phase is the beginning of the A-B-C correction at the end of a 5 wave move. If that does turn out to be the case, then we are looking for a deeper correction at this point.
Any reader who is more familiar with the nuances of Elliott Waves is invited to critique or extend the analysis. I’m not sure it would change my market outlook, but I am curious.
(click on chart to enlarge)