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I was checking out the probability of reversal for the three main US indices today after the close:
The NDX stands out as the most probable candidate for a pullback on Friday.
SPX and RUT may follow through but you never know, there have been quite a lot of discordance moments between these 3 indices as of lately.
(more…)Back on Tuesday 3rd June I laid out a possible bullish scenario in which I was looking for retests of the all time highs on SPX and NDX, with follow-on targets if both ran higher, a retest of the all time high on INDU, and a possible longer shot retest of the all time high on IWM based on a large IHS. Since then we have seen all three of those new all time highs on SPX, NDX and INDU, and the IHS on IWM has broken up hard and made it slightly less than halfway to the target at a retest of that all time high.
What we haven’t seen yet is the further extension to the possible trendline targets that I was looking at on SPX into the 6450-6500 area, or on NDX into the 24000-24500 area, or the new all time high on IWM of course, but I think this rally is likely now very close to at minimum to a steep retracement and may currently be making the highest highs that we will see in 2025.
(more…)You’ve surely heard of the disparaging term “Idiot Wave” applied to “Elliott Wave.” It seems rude and dismissive, although I’ve got to say, very few techniques have had more to do with me prematurely thinking the top was in than good ol’ EW, so I don’t bristle too much at the put-down. As I’ve mentioned, I’ve found EW to be very helpful in bear markets, but in bull markets, it’s been pretty much a disaster.
Below are a few charts from the good folks at EWI, and I’ve got some remarks about these charts as a whole.
As you probably know, the S&P 500 is not calculated by adding up the closing prices of the 500 component stocks and dividing by 500. Instead, it is weighted based on market cap. This, the company with the largest market cap of $4 trillion, NVDA, would be about 40 times more impactful to the value of the S&P 500 compared to, say, DoorDash, with about a $100 billion market cap.
If the 500 components all moved up and down the same degree, the equal-weighted S&P would be in lockstep with the “normal” market-cap-weighted S&P, and for many years that was pretty much the case. In recent years, however, the standard S&P has been outpacing the equal-weighted one to an increasing degree.
Here below is a synoptic view of the DAILY situation for the 3 main US indices: the RUT is the one that appears to be overbought (82% probability of DAILY reversal).
At the close today, the RUT Index was showing this scenario: 3 days up, closed at 2263.41, the time model (right hand side) shows 87% probability of reversal after 3 days up, when this particular trend pattern is encountered.
(more…)
