2015 is shaping up to be an exciting year. The Gannologists are expecting a 25-30% advance in the market due to this being the “5th year of ascension.” Robert Prechter and the Ellioticians are still looking for the elusive “Grand Super-Cycle Peak” which will usher in a catastrophic decline in the indices. Harry Dent and the Spending Wavers are expecting a great deflationary spiral which also preludes a catastrophic drop in the indices over the next several years. Then there are the Hurstonians (me) who are trying to pin down the 4 year cyclical high which may mark the end of this 6 year uptrend.
Below is a weekly chart of the S&P 500. The price wave at the bottom of the chart is the 4 year wave showing 4 and 1/2 oscillations. The output was run through a demodulator which provides a clean look at the dominant price wave. The underlying cyclical structure today is virtually identical to the prior four 4 year cyclical highs. It is my opinion that the probability of this being the 4 year cyclical high is very high.
David postulated in his most recent post that the phasing of the 80 week wave is the determinative factor as to whether the indices are at or approaching the 4 year high. I do not share that view. The uptrend over the last two years has been so strong that the amplitude of the 80 week wave has been so greatly reduced that, alone, it has had very little influence on the price action from a filter perspective. However, in my opinion, the 10 week wave has been the most visually evident price wave since the November 2012 4 year low. In addition the 10 week price wave has painted 15 consecutive higher highs since the 4 year low. I believe the first indication that the 4 year high has formed will be a change in that pattern, i.e. a lower 10 week high. A lower 20 week high would be the final confirmation.
The chart below is a weekly chart of the S&P 500 showing the most recent oscillations of the 10 week wave. It is currently cycling down. How far down the price action will drop is unknown. The usual suspects are based on standard FLD projections. The shorter waves, which are showing big amplitude again, will greatly help in identifying approximately when the next 10 week low will occur as the price action approaches it. A weekly close below the bottom of the dominancy envelope will provide a strong indication that the next 10 week high may be lower.