The SPX last had a -5.0% correction from the 2194 8/15/16 high to the 2084 low on 11/4/16, which was a pullback to the 12-month EMA. Trump was elected 11/8/16 and the index closed at 2140. There was an 8.6 year cycle leg date at 2016.825 which was 10/28/16 versus the 11/4/16 2084 low, and 5 trading days after that low [remember it is a time zone] it was followed by the surprise Trump election victory.
2017 was one hell of a year as the SPX gained +19.4% from 2239 [12/30/16] to 2674 [12/29/17]. The index is +5.2% YTD to 2810 [1/19/18] and is +31.4% from the election 11/8/16 close at 2140. It has not closed below the 3-month EMA in 15 months which is obviously straight up in addition to the 12-month EMA. There have been no negative monthly RSI divergences which continues to be extremely O/B and went out at 99.06. The Pi date of 3141 days from the 3/6/09 670 bear market low to 10/11/17, and the 8.6 year cycle date on 11/24-25/2017 were accelerations in the SPX not reversals. There was no RSI negative divergence or a rounding over of the monthly averages, but it was obviously extremely O/B.
The advance from the 670 2009 bear market low and the 2140-2810 SPX current election advance is also 670 points. The square root of 670 is 25.88 but we round down to 25.8 which is 3 x 8.6 If you go to my site at geometricmarkets.com you will find the free Square of 9 Calculator you can download so my next comments will be obvious. Markets will often make major moves in 45 degree increments which is a factor of .25 on the calculator. You use major and significant highs and lows. Starting at 670 the current resistance levels are 2823 using the .25 [45 degree factor] and 2810 using the .125 factor [22.5 degrees] which should also be used especially from previous swing point highs and lows in addition to confirmation of the .25 factor. If you multiply 25.8 x 109 you get 2812 and the Natural Square of 53 is 2809 so you can see the confluence of cycle symmetry in the current zone. However, there are no negative divergences in the monthly RSI or turning over of the 3- and 12-month EMAs to confirm high odds of a cycle reversal.
The last monthly RST entry was in June 2015 following the May 2135 high after which the SPX declined-12.5% to 1867 in 8/15, rose +13.3% to 2116 in 9/15 followed by the 1810 -14.5% double bottom low at 1810 in 2/16. This RST had the obvious negative technical divergences mentioned above.
The next RST will be triggered on a close below the low of the high month which so far is the current 2810 high with the 3-month EMA at 2721 and 12-month EMA at 2527. However, short-term and day traders work more closely from the confluence of symmetry and daily chart indicator confirmation for key trading levels and opportunity.
The bottom line after all of the political bluster is that disposable household income has to increase and the the cost of living come down, or at least remain the same and disposable income rises. I have never seen what we have now in that if you don’t read the news you are uninformed, but if you do you are misinformed, so stay on top of the cycle symmetry and technical evidence confirmation when making long-term equity exposure decisions.
Kevin Haggerty