The $SPY has been trading higher since the summer of 2019’s correction. The Index has made new all time high as we have been forecasting at Elliottwave-Forecast.com. It is currently still trading within the Super Cycle degree since 2009 and the expected extension is taking place. Below is the chart of the S&P 500 ETF:
$SPY is trading above the Super Cycle degree trend-line, but every single high is coming with momentum divergence in the RSI. The momentum divergence is typically happening within wave V. When we count the waves since 2009 low, a wave 5 extension can be happening in the Index. 2020 is looking like a very, very interesting year across the market and many extremes can be reached in time and price. The following blog explains our views and why the year of 2020 can be the year where Indices make a huge peak or a temporary peak.
2020 is also an interesting year where something should be happening to create the pullback across the world Indices. We believe the Super Cycle degree from 2009 low ends next year. When it ends, many factors will determine the Elliott Wave counts whether we are ending an ABC from all time lows or we are ending wave (III). One factor for example is the extensions in $SPY and whether the index trades above the 1.618 extension which comes at $319.00. Another factor is where the Yen pairs stand when the $SPY dip in 2020 takes place.
As we always said, the Market trades as a whole and understanding the correlations among instruments and groups are the key. The United States will have a very interesting political year in coming months and year. First of all, the Presidential Election will take place in November of 2020. Secondly, it’s going through the impeachment process of the president. We can see as always the technicals calling the Market, but we can see a political reason to justify the biggest pullback since 2009. As we always said, we do not forecast or trade based on fundamentals or news events. However, we understand when The technical side starts sending warnings, there is always a reason for the pullback. In this case, the potential justification is the 2020 elections or the impeachment debate.