Gartley Construct and the S&P 500 Monthly

sp500 gartleyFrom the 1987 lows, arguably we rallied right up to the extreme highs in early 2000. Call this point A on a Gartley construct. From A, we fell apart and found a bottom in October 2002. Call this point B. Then we rallied into September 2007 when we hit the wall with a major global financial crisis. Call this point C. Next, we can draw the parallelogram as per Gartley. Look where point D is. Notice that we actually hit a price aligning with D before the predicted time where D resides on the chart. This is OK. What Gartley suggests is that you do not actually have to have price and time perfectly aligning at D. D can be hit in advance. In the case of the S&P500, once price point D was hit ( March 2009 lows) we again started to rally. The current rally that has the media squirming in their seats (Dow 14,000 blah, blah blah…) will measure out to be a fraction of AB or maybe even an extension of AB based on phi (1.618). The current rally may even turn out to be a fraction of the move 1987 lows to point A. I will leave it to you to play with some phi math to see where the current rally may end.

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