Just a follow up on the SPY from my February 2017 post. We are still in wave 5. Could continue extension above upper trendline for awhile or turn on a dime tomorrow. There is plenty of overconfidence in the market right now and an attitude of "this time is different", but many will be disappointed and fearful when they realize they are wrong. Waiting for confirmation before declaring the end of the bull market. Until then, the bull market is without question still intact.
Still in the 260-280 range. With this long of a pause, there's is a stronger case for a breakout above 280 than previously. SPY is not as overbought now due to the sideways move. We'll see what happens!
AlbCM
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Feb '17 post was good. So time-wise, where do you see the final top?
flynnad
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@AlbCM, For years I've tried to call the top (time and/or price point), but have always been unsuccessful. So I've given up trying to come up with a set-in-stone prediction for calling reversals. That being said, we are in Wave 5, which is the last wave before a significant decline. A weekly close on SPY below 260 would indicate more weakness is likely to come, probably a decline back to the bottom trendline (235-240 range). That would be a very reasonable correction while leaving the bull market intact. Until that bottom trendline is broken with a solid weekly close below it, we are still in an uptrend. A weekly close above 280 would indicate another move up is likely. I would give the scenario of a close below 260 a much high probability of happening than a close above 280. Maybe 75% chance close below 260 vs. 25% chance close above 280. Until we see one of those two happen, I am short-term neutral and long-term bullish.
AlbCM
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@flynnad, so you are saying a new all-time high yet your chart points to a 50% decline from March till the end of 2020.
flynnad
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@AlbCM, sorry I should have been a little clearer. I think the scenario laid out in the chart is very probable. This is the path I think SPY will take if it continues to stay below 260. Today we did get that weekly close below 260 I've been looking for. If we open and close below 260 next week, I think we fall back into the ascending channel on the chart. I think we hang out there for a little while, maybe a few months, then really start the decline and continuation of the current correction. This could be a slow fall, similar to that of 2000, instead of the fast fall we saw in 2008. So personally, I think we are at the top now and are starting to break down. BUT, if by some chance we do suddenly go back up and break above 280, then I would be forced to reconsider and would say there's still more upside. Hope this helps.