The current level of the S&P500 index is 4124, which 13.3% above the rising 200 day moving average, currently at 3588. Based on the market range seen between the 19th February 2020 and the 23rd. of March 2020 which embraced a high of 3393 and a low 0f 2191, the Fibonacci 61.8% upside projection would bring us to 4135, which is where we are right now. The Fibonacci 76.4% upside projection would bring us to 4311 which is a realistic target in the short-term.
This market is currently overbought, with the 14 day relative strength index at 72%, therefore it might well be a wise move to take some money off the table. How much downside potential can we expect should the current bullish sentiment subside? Looking at the dramatic fall which took place in March 2020, when the market fell 35% below its 200 day moving average, we can expect that a fall of similar intensity could well bring us toward the 2650 level.
The Elasticity Toolkit for Metastock was created to obtain maximum gains in both sideways and trending markets with minimum risk. Developed by Timothy Straiton, the system performs with incredible results in almost all equity markets with a daily periodicity. The Elasticity trading system focuses on short-term market fluctuations and takes advantage of deviation or "elasticity" from the mean price. Imagine the action of a rubber band being stretched and at the moment where the expansion loses momentum, a contraction takes place, forcing movement in the opposite direction. The Elasticity trading system signals a trade at the moment the deviation from the mean loses momentum.