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The Elliott wave patterns for S&P 500 and US Dollar Index are at or near terminal points that push them towards underperforming markets in 2019.

A long-term pattern in US equities may have just completed. If S&P500 drops below this red (2)-(4) Elliott wave channel line located near 2550, then a bear market to 1800 would be considered normal. Lower levels could be in play if the October 2018 high completes an even larger pattern going back to the depths of the Great Depression lows of 1932. Pay attention to scenarios #3 and #8 of 8 scenarios after an Elliott wave impulse pattern completes.

Secondly, S&P500 priced in gold appears to have completed a bearish 5-3 Elliott wave pattern. This ratio is peeking below the blue trend line as we speak. This adds additional confirmation of weakness on the S&P 500 horizon.

Top Trade Idea 2019: S&P 500 Takes a Back Seat with the US Dollar

Data Source: TradingView. Prepared by Jeremy Wagner

Lastly, if we do see a risk averse market in 2019, the US Dollar Index (DXY) may not live up to its safe haven name.

The Elliott wave pattern for DXY is a bearish 5-3 pattern from the 2017 high. Though it could drift higher, longer term DXY appears poised for an eventual move towards the low 80’s (general target near 82). We anticipate this move so long as DXY remains below 104.

Top Trade Idea 2019: S&P 500 Takes a Back Seat with the US Dollar

Data Source: TradingView. Prepared by Jeremy Wagner

To see all the of the analysts Top Trade Ideas for 2019 and Top Lessons from 2018, download the guides on the DailyFX Trading Guides Page.