Guest Commentary: Classic Long Set-up for the S&P 500
The dominant trend in the S&P 500 index remains bullish, which makes every dip an opportunity to buy in some degree.
The decline in SPX from 1851 to 1737 was nothing more than a three-wave Elliott correction. Now, the RSI shows two divergence sequences, which further confirms that the decline was corrective in nature and comprised of three waves.
The rally from 1737 is now unfolding as an impulse, but SPX still needs another high to complete a five-wave move, which would be the first wave of the overall wave ((5)).
The trading strategy is still to buy any wave (2) dip, which would need to be corrective and in three, seven, or 11 swings. Selling the S&P 500 in this proposed wave (2) is not advised.
By Eric Morera of Elliottwave-Forecast.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.