The S&P 500 seems to have weathered the frequency modulation that has plagued the index for the past several months from a spectral viewpoint. Below is a daily chart with the 40 day wave extracted at the bottom. The effect of the frequency modulation is clearly visible in the first four months of this year, evidenced by the spacing of the filter output lows. The 40 day wave has been very dominant the past four months, driving the price action up and down. The recent lower high and relatively equal lows of the 40 day wave are further evidence that the underlying trend is flattening. Trading against the 40 day wave is not advisable at this time in my opinion. A lower 40 day low, theoretically, will make it very difficult for the index to push to hew highs. The good news (for traders) is that the shorter price waves have plenty of amplitude which makes trading in the direction of the 40 day wave relatively easy(?) when applying Hurst’s principles.
The longer term picture remains the same. The 80 week wave still does not have any significant amplitude to drive prices regardless of where one phases the two most recent lows. Below is a weekly chart with what I believe to be the 10 week price wave extracted at the bottom. It has been very consistent over many years. Keep a close eye on the recent 10 week lows. A hard break below a prior 10 week low followed by a lower 10 week high should signal the start of the “correction” for which everyone seems to be waiting.