Hamilton's E-Wave Analysis

S&P 500 , update

s&p sept 2012

See also a previous blog on the &P (SPX). Though we never ever expected the S& 500 to rebound to these lofty levels, and take almost 4 years to do so , we do find this pattern very intriguing now that we are here. Over the past two years this index seems to have traced out a pretty classic diagonal, that is a wedge. The wedge is moreover of approximately the same height as the move in the first nine months of the rebound. This makes for a very symmetric A-B-C pattern forming a B-wave.. It travels fairly precisely to the level of the B in the preceding large down drop (the great recession). What it tells us is that the S&P may be in for a big disappointment soon. As always if this does occur a minimum expectation would be for the index to fall at least halfway down this chart.

We would sell all stocks that do not have a clear positive outlook !