SPY: Is It Near Its Top?

The move from $133.16 is nearing its end. The indices may be making new all time highs, but we believe that a large degree correction should be expected by the markets. According to our Elliott wave count on a daily basis we can see that we are very near to completing wave 5 in SPY.
Our view is that when this upward move ends, prices are going to fall towards the 148 area at least. The first sign of this bearish trend change will be if prices move out of the upward sloping channel in the above diagram. The second sign will to see prices overlap and push below $156.11.
Taking a closer look at the above 2h chart for the past 2 months, we observe that even the final wave up is at its final stages. The blue diagonal shape that includes the recent overlapping upward move from 153,50 is the trigger that we are going to use. In other words, if prices break down outside of the ending diagonal wave, we will have another confirmation sign that trend changes to down with target the 148 level. Nevertheless prices could continue the upward slide towards 158, but investors should be ready to cover their long positions as prices can turn down fast at any time. Best strategy is to raise our stops along the way. The sequence of higher highs and higher lows help us determine which levels to use as a stop.

Disclosure: None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions.