Dow Jones and S&P 500: High vulnerability to correction

In our last analysis, we had shown a maximum target for the Dow Jones at 29,638 points (1.62 retracement) on the chart, and also described it as an option. The development in the meantime has now brought this level within reach. It remains to be seen whether the force of the upward movement will be sufficient to reach this target. The first signs give cause for doubt, without which a reversal of the trend could already be observed at the moment. The long-term forecast from 2016, which was extremely optimistic at the time, has since been proven better. Hopefully also the critics at the time.

Prospects for the Dow Jones

In the course of the formation of wave (5), the Dow Jones will continue to rise in the following days. The steps will become smaller, and yet we still expect the run-up to the 1.62 retracement described at the beginning to 29,638 points. This rise is of course no longer compelling, as wave (5) has long since been confirmed in the regulatory sense. We do not expect the Dow Jones to be much higher than described. In our opinion, the trend is exhausted at this level. From 1.62 retracement, the chance of a somewhat more extensive correction will open up.

Der Dow Jones dürfte vor einer Korrektur stehen

This movement takes its course when the retracement falls below 0.24 with a simulated 29,224 points. The dynamics of the first phase can be very high. Dangers would arise if the larger 0.62 retracement (28,941 points) is broken. Should the Dow Jones decide to do so, the upward trend will come to an immediate end. In our forthcoming long-term review, we will deal specifically with the subsequent phase.

Conclusion

The Dow Jones is currently still on an upward trend. In our opinion, it is too late for an engagement, and the susceptibility to correction is very high. We therefore advise against a positioning in the index. Hedge your positions at the latest on the 0.62 retracement at 28.941 points.

Prospects for the S&P 500

The S&P 500 is unwaveringly heading upwards and does not even give the impression that it wants to interrupt this phase at least once with a correction. With this development, the index largely reflects our latest analysis. In the last edition, we had predicted a rise to 3,319 points (1.00 retracement). Currently, the S&P 500 is trading at 3,330 points, only slightly above this resistance. The distant target of approx. 3,900 points shown in the upper chart is getting closer and closer and thus out of the world of fairytales.

In the course of the formation of wave (5), the trend could now rise to the 1.00 line (3,319 points) and also form a slight closing price above it. As the chart shows, this positive development may continue in the coming days. With the small 1.00 retracement (3,339 points), the ideal typical target of the very small wave (v) is within reach. We do not see the index rising significantly at first. Should a sustained jump above this line materialize, the S&P 500 will thus open the way to the 1.62 line at 3,419 points.

From this level at the latest, the index will have to submit to a correction. This phase will begin when the index falls below the 0.24 retracement level at 3,266 points and will be responsible, in several stages, for a loss of points up to 3,167 points (0.62 retracement). From a medium-term perspective, the goal of the correction lies in the range of the 0.50 retracement (currently 3,083 points), which is not unusual for a wave “2”. From a temporary perspective, the index is facing an even bigger correction.

Der S&P 500 steht wie der Dow Jones in den letzten Zügen einer Aufwärtsbewegung

Conclusion

The currently still ongoing uptrend will continue for a few more days and the trend will rise to 3,339 points. Nevertheless, we would advise against a renewed positioning. In order to hedge your positions, you should fall back on the 0.24 retracement (currently 3,266 points).

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