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Technical Analysis

US stock indices - Long term

by Antonis Benis, on Apr 16, 2021 1:00:00 PM

I am using Demark indicators, cycles, Gann analysis and seasonality for the forecast.

S&P 500 (SPX) has a complete yearly 9-13-9 pattern from the 1980 major low, a complete 9-13 quarterly pattern from the 2009 low and a perfected monthly 9-13-9 pattern from the 2016 low. The 9-13-9 pattern is considered to be especially bearish. When these patterns coincide on different time frames (in this case yearly-quarterly-monthly), then, this gives additional confidence that a major price reversal is ahead (see charts 1,2,3)

Chart 1 - Demark yearly

SPX - Demark yearly

Chart 2 - Demark quarterly

SPX - Demark quarterly

Chart 3 - Demark monthly

SPX - Demark monthly

For the cycles analysis, I am using a monthly chart of the S&P 500, applying the 3 most dominant long term cycles (40+ months). All 3 cycles are converging and rolling over together now, last time this happened was at the major tops in 2000 and 2007; the next similar topping convergence will be in late 2027. Going forward, the cycles bottom together in November 2022, the position of the cycles there, is exactly the same as the one in the 2002 major bottom; the next similar bottoming convergence will be in summer 2029, looks exactly the same as the one at the 2009 major bottom. Notice that cycles are about price reversals, not about the magnitude of the moves; also, I am using here a monthly chart for the long term view, i.e. the dates may be a few months off (see chart 4; red projection line with added dates and the 3 cycles underneath).

SPX - monthly cycles


Gann analysis appears to be in agreement with the Demark indicators and cycles. I am mostly confident with the levels for Nasdaq 100 and S&P 500, below the major resistance levels:

S&P fut.: resistance at 4340 and the 1x2d angle (see chart 5)

S&P fut. - GANN weekly

Nasdaq 100 fut.: resistance at 15206/15258 and the 8x6 c angle (see chart 6)

Nasdaq 100  weekly GANN

Dow 30 fut.: resistance at 35167/35221 and the 3x1c angle (see chart 7)

DOW fut. weekly

Russell 2000 spot: resistance at 2457/2469 and 1x3 d angle (see chart 8)

RUSSELL 2000 spot weekly

Decennial pattern for Dow Jones (averaging all years ending in “1”, starting in 1901) suggests a top in May (see chart 9).

DECENNIAL Dow Jones

Courtesy of Seasonax

US presidential pattern (post-election year) is different, suggests a top in early August (see chart 10).

Post election presidential pattern

Courtesy of Seasonax


Conclusion

A major top is expected here in 2021, the exact date is not clear but we are getting close; my best guess would be May/June according to my Gann analysis, should become more apparent as we approach the top. There should appear various divergences at the top, NYSE Advance/Decline line continues to make new highs. For now, momentum/breadth are still pristine while valuations and bullish sentiment at levels last seen at the 2000 major high.

Copy of HKCM ABO 2021

 

Topic:Trading SignalsS&P 500Dow JonesNASDAQRussel 2000Gann AngleUS Stock Market
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