The United States stock prices rise but the trade deal headlines still speak uncertainties. The following S&P 500 technical analysis is based on the Elliott wave theory.
November 08, 2019 | AtoZ Markets – Contradicting trade deal headlines continue to drive prices up and down. Meanwhile, the US stock market indices show that the current scenario fits the US well as investors become more ready to go for risky investments. All the US stock indexes have reached new all-time highs after reports that the first phase of trade talks will be agreed. S&P 500 has gained 58 points in November to hit a new record high of 3097. Nasdaq and the Dow have also gained significantly in the same time to reach fresh all-time highs.
However, as the week closes, the major equity indexes dropped and remained flat as investors book profit after this week massive move. After a sharp intraday dip to 3073 from 3096, the S&P 500 has started to climb again. Unless 3064 is broken downside, it seems the index will reach a new high next week. However, the price has entered a major resistance zone and there might be a bearish correction afterwards.
S&P 500 Elliott wave analysis
Technically, price is expected to hit new highs above 3200. However, it remains to be seen how it will react at the 3090-3128 Fibonacci resistance zone. In the last update, we looked at the price level where the next large dip could happen. The long term minor wave 5 is emerging and there are possibilities of an ending diagonal as the price advances in a sequence of 3-waves (All the charts used below are from TradingView)
Wave 5 could continue to 3292 and complete a wedge/ending diagonal pattern. At the end of wave 5, the stock market will most likely experience another sharp dip. Taking it down to the lower time frame, we used the chart below in the last update.
We envisaged an ending diagonal with the 3rd wave running toward a strong Fibonacci confluence zone. With this in mind, the bullish trend might lose its course a bit and thus be followed by a slump to 3000.
In the meantime, a bullish impulse wave from 2855 has extended to the resistance zone. A bearish correction down to 3000 is very much possible before the next surge. This should happen especially if there is a reversal pattern at the top. An ending diagonal wave v is an example. While stock prices rise higher, it has to overcome a strong technical barrier to climb higher.
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