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S&P's Rally Was in the Cards -- Actually, the Waves

by Vadim Pokhlebkin
Updated: November 15, 2019

Friday's (Nov. 15) jump in U.S. stocks is being primarily attributed to "trade-deal optimism."

But the real story lies in the charts. A common Elliott wave pattern called a "triangle," to be exact.

If you aren't familiar with triangles, here's a quick tip from our own Jeffrey Kennedy:

"Triangles are probably the easiest corrective wave pattern to identify, because prices simply trade sideways during these periods. Triangles offer an important piece of forecasting information -- they only occur just prior to the final wave of a sequence

"...if you run into a triangle, you know the train is coming into the station."

Here's where one (of several) opportunities that triangles offer comes into play.

The move following a triangle is usually swift and powerful -- it's called a post-triangle thrust. (See it in the chart below, circled in green).

Well, one day before the rally to new all-time highs in U.S. stocks, our U.S. Intraday Stocks Pro Service caught what appeared to be the final wave of a triangle and alerted subscribers:

November 14:

Bottom Line: As long as the bottom of wave (c) at 3078.80 remains intact there should be a...wave up to new highs.

Today's low counts well as the bottom of wave (e) of a triangle. It came within 9 cents of the 3083.35 target...

Wave (iii)... is underway and should soon take the market to new highs.

19115 Bartb1

You know what happened at open on Nov. 15: The S&P complied and rallied at open to new highs.

19115 - Bartb2

Intraday moves like this happen in the blink of an eye. The question now is, where will stocks move from here?

If you follow Elliott, you already know the answer. If not, our U.S. Intraday Stocks Pro Service can give you some qualified answers right now.

Let us help you navigate the fast moves ahead in U.S. stocks.

UPDATE: According to Elliott Wave Principle, "In the stock market, when a triangle occurs in the fourth wave position, wave five is sometimes swift and travels approximately the distance of the widest part of the triangle. Elliott used the word "thrust" in referring to this swift, short motive wave following a triangle."

On Monday morning, November 18, Robert Kelley posted a new forecast for his subscribers, telling them exactly where to look for the "thrust" to end.

Good morning. The pullback from the overnight high in the futures counts as a completed fourth wave. That sets the stage for just one more new high above 3127.75 to complete the wave ((v)) thrust from a triangle. That should lead to a tradable top soon, but there will need to be small signs of a downside reversal before it will make sense to consider short positions. Trends have a way of going farther than you would suspect which is why I'm cautious about trying to call a top here.

Result:

191122 - chart