Into Laszlo’s Trading Room: S&P 500 life after the stalling pattern

This weekly chart reviews the end of the stalling pattern, an almost totally ranging action where “bulls were not interested” in buying new highs anymore. It covered 314 S&P points to the north which is not bad considering the strength of gravity at this height.

S&P500 weekly chart update with Elliott Wave labels

Studying the internal details of the structure might be a bone of contention for many, but keeping your eye on the multiple marginal new highs, the sloppy structure, the three pushes up, and the channel-like trend with the converging trend lines were all revealing the terminal function of the pattern.

And, what is more, the breaking action following the end of the structure is the final tell when identifying Elliott’s ending diagonal. He expects a dramatic reversal which return prices below the starting point of the pattern, here prices returned to the October 2014 lows in a violent manner, as price declines much faster than it climbed on the way up. The diagonal needed 40 weeks to complete its structure, and so the decline should last 13 to 20 weeks. The decline looks definitely fast enough for that minimum achievement.

Hourly, short term Elliott Wave update

Looking at the hourly chart we can identify the Monday open as the low for wave three and expect further lows aiming beyond the October lows at a minimum, only with a decelerating slope. Yes, we experienced strong crashing momentum to the downside, but don’t rush the action too hard for now because the wave one-two nesting lasted 3 weeks before the break. Now that the market did the bungee jump the consolidation can eat up similar amount of time.

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About Laszlo Nagyferenczi

Laszlo Nagyferenczi is a day trader, analyst and instructor as well as the creator of the proprietary Context-Momentum-Signal concept. He has authored over 200 blog articles about his unique approach to trading and the Elliott Wave Theory. His clients appreciate his ability to go from the theoretical to the practical i.e. all the way to the actual trade set ups. Originally hailing from Hungary, Laszlo is fluent in English and Hungarian with a long list of education credentials including BA in Economics, Certified Elliott Wave Analyst (CEWA), Certified Adult Educator for T-Groups, Professional Co-Active Coach (PCC) at CTI. The real education, though, has been the trial by fire in the markets, with real capital at risk.

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