The broad NYSE Composite Index (NYSE Arca: NYA) has put in a series of higher lows since we last updated our bullish forecast in May.
Now it is testing support again, and the relevant price cycle suggests it can rally into mid-July or longer. And Elliott wave analysis thus far agrees as well.
Even though the pattern has been choppy, the index achieved the expected breakout above the descending trend line that had constrained it since February. Subsequent tests of the supporting channel harmonic were brief and produced strong bounces.
If current support holds, the pattern should be viewed as an upward escape from a contracting range that may have been an Elliott fourth wave.
Over on our website we have been following similar patterns in the S&P 500, the Russell 2000, and the DJIA indices.
A support zone extends as low as 12428 based on Fibonacci relationships among the recent waves, and that allows for a brief poke beneath the channel harmonic without ringing alarm bells. Meanwhile the cycle derived by the Lomb periodogram, shown at the base of the chart, suggests the current area should be viewed as a low preceding an advance that should last several weeks if not longer.
NYSE Composite (NYA) Chart
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The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
