S&P500 Long Term Chart Update

On Mar-21, i published "S&P500 Long-Term Chart: Sell in May?", suggesting a target of 1220 on the SPX, based on an upper parallel trendline from the year 2000 high, and the 61.8% retrace level. Should've listened to myself - it turned out pretty much spot on! SPX reached a high of 1219.8 on the 26th of April, followed by that dramatic plunge in May.

Here's an update of the same long-term chart:

Price kissed the upper trendline, and reversed. (Note that this chart does not register the intraday low of 1065). Last post called for a retrace into the 1180 area, before a U-turn. SPX only reached 1174, and is now threatening to break down below the uptrendline. Whether this is an a-b-c correction of an impulse, or an impulsive start of a downwave to new lows, remains to be seen. A rapid descent from here, would point toward the latter case.

Huge Head & Shoulders!

The 15-year chart above, provides a pretty good glimpse of a huge Head & Shoulders in the making. If it materialises, the target we're looking at is unimaginable(at this point), and more or less confirms Robert Prechter's bearish wave prognosis. I'll leave the target calculation to you. ;) He does in fact mention a long-term H&S pattern on the DJIA in his April Theorist, which is available for free for a short period. Click here, or the banner above. Of course, this is just a possibility, and will become less likely if we break above the red upper channel line.

Alternate - Megaphone Pattern?

An eventual break above the red trendline, after this medium-term correction(if it is that!), might lead to a retest of all time highs, and setup a Broadening Top or Megaphone Pattern as illustrated below (see the top blue line on the chart above). With all the currency printing presses in overdrive, we cannot rule this scenario out. In the long-run, markets will still fall - only harder!

In the very short-term, support is around 1100 area. All the best!