Where Now For U.S. Markets?
David Banister | Dec 15, 2014 11:56PM ET
The markets have been in a rough and tumble recent period here with a 3.5% decline last week along with a further drop to the 1982 lows so far on Monday. What is likely ahead?
The S&P 500 probably just completed the initial wave down of an ABC Correction from the 2079 highs. We are counting this correction as a “Wave 2″ of a full 5 wave sequence, up from 1820 lows in October. Essentially, Oil is the reason being used by the media for the correction, but that is just the convenient headline excuse of the day. Instead, what we will likely see is a Santa rally “B” wave ahead and then another leg down in January to complete this larger ABC move.
Elliott Wave theory is very hard to use to accurately forecast movements ahead of time, but we try our best to project, analyze, and then adjust as needed. Our best estimate is the 38% Fibonacci retracement of the 259 point rally completed at 1982 yesterday. A “B Wave” rally up from here is normal and a C wave down to the 1920 area would complete a 61% retracement of that Wave 1, 259 point rally.
Following the completion of a standard ABC Correction we should have a Wave 3 Bullish wave in early 2015 that will challenge the highs of 2079 and likely overtake them. We do not like to get too far ahead of ourselves with the forecasts but we expect the excuse for that rally will be low energy prices and a strong consumer going into 2015.
Some of the obvious rally names for January will be energy stocks, but will need to be carefully selected. Gold needs to get past $1241 on a closing basis before we get too bullish on those names, but we have them on watch as well.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.