Does Vertical Go Parabolic In the NAZ?

“The Rule of Alternation… in the bullish case… is that this 2 year Megaphone may see a new bull market that will see a move north of 4,000 SPX take shape quickly.”

We wrote the above on March 24, 2020, one day after this year’s crash low.

So far the SPX has melted up to 3500 from 2190 in 5 months. That’s quick.

While it’s been a direct route versus a scenic route, this 3500 level may prove to be an important hurdle for the SPX… even if it ultimately does fulfill an advance to 4000 or even higher.

Last Monday I posted the following weekly and monthly SPX’s showing the 3500 and 4000 region resistance.

The following weekly SPX is an updated chart for this year that shows the index started to go vertical last week. The question is whether this was a climax run or the start of a parabolic.

The above weekly shows a Rising Wedge connecting the Feb/March highs to Friday’s high with a channel that points to the 4000 region should we get a sustained move over 3500.

The SPX is at a juncture recognition with this acceleration above the February high into a critically seasonal time frame.

Breakage below last week's low ties to a break of a 3 point rising trendline which will trigger a weekly Rule of 4 Sell signal.

On the following weekly NAZ I connected the October 2018 pre-crash highs with the February 2020 pre-crash highs.

The NAZ broke out above this trendline two weeks ago.

I also connected the December 2018 low with the Feb 2020 top.

These are two of the three most important points on the chart.

It intersects with a trendline that defines the advance from the September 2019 low –a trendline that, when broken, called the March crash.

The intersection of these two trendlines at the 12,000 region should define significant resistance.

As well, violating the red trendline on trade back below around 11,200 suggests a possible Trap Door.

The NAZ is more extended from its 50 week moving average than at anytime since the March 2009 low.

Notice how well-defined and smooth the advance from September 2019 to February 2020 was — until it wasn’t.

Ditto the huge fractal of that well defined advance from the March low.

As well, we got a smooth well-defined advance off the December 2018 low.

Each of these advances is at a greater amplitude and trajectory than the prior.

The takeaway is that we may be staring a pattern of 3 drives to a high in the face.

A reversal back below the breakout from two weeks ago warrants caution.

Get Jeff Cooper's FREE eBook: Unlock the Secrets of the Square of 9...

Download Now

99.999% of traders have never even seen the Square of 9... let alone understand its potential.

Do you dare to be different?