Goldman Warns "A Corrective Process Has Begun" - Targets S&P 2,449

The S&P 500 is rebounding miraculously off its 100-day moving-average in the face of global panic about President Trump's tariff proposals...


But Goldman Sachs' technical analysis team are worried and target a drop to 2,449 for the major US stock index.

The S&P started a corrective process at the late January highs

The index saw an initial selloff that was impulsive in nature (wave A). This tends to mean that there’s likely going to be another impulsive 5-wave decline to complete an ABC 5-3-5 count. From current levels, an eventual C wave could reach somewhere close to 2,449.

Having said that, it’s not uncommon for wave B to form complex structures (often triangles). Although ultimately bearish, there’s scope for some initial consolidation/ range-bound price action while still in the “body” of the February range.

The next significant retrace level below is 61.8% from Feb. 9th at 2,631. The 200-dma will likely be critical at 2,560. This particular moving average held very well at the prior low. Getting a break below it would therefore help to confirm that this is in fact wave C targeting at least ~2,449.

View: Could see overlapping price action in between 2,600 and 2,800. A break below the 200-dma will open up a minimum target down at 2,449.

The S&P has an eventual target at 2,449...

An ABC equality from the January high projects down toward ~2,449

Reaching this 2,449 level would also mean retracing ~38.2% of the immediate advance from Feb. ‘16 (2,467). This would therefore be an ideal target from a classic wave count perspective; that is, if correcting the rally from Feb. ‘16.  

As has been discussed in previous updates, the market could also be starting a much bigger/more structurally corrective process, counter to a V wave sequence from the ‘09 lows. If that’s the case, there should be room to continue a lot further over time. At least 23.6% of the rally since ‘09 which is down at 2,352.

Bottom line, it’s worth considering the possibility of continuing further than 2,467-2,449. Doing so might imply that this is not an ABC but rather a 1-2-3 of 5 waves down, in a larger degree ABC count that could take months to fully manifest. While it is still far too early to make this call, the important thing to note is that the 2,467-2,449 area will likely be trend-defining.

View: Watch for either a base or break of 2,467-2,449 support. Breaking the level risks opening up a lengthier/deeper corrective process.


Oldwood Mon, 03/05/2018 - 19:43 Permalink

If we want to look at a disaster, look no further than Zerohedge.

After years of following the endless stream of totally depressing crap day in and day out, NOTHING predicted has come to pass. Every person following ZH analysis has LOST big time.


Iconoclast421 Oldwood Mon, 03/05/2018 - 19:57 Permalink

You are committing a fallacy here. The technical pattern is bearish. There have been quite a few of these patterns over the last 9 years, but this one is imo the most obvious I've ever seen. Sure, it could get panic bought by the printers. It all comes down to whether or not they will choose to intervene.

In reply to by Oldwood

Oldwood Iconoclast421 Mon, 03/05/2018 - 20:08 Permalink

"The technical pattern is bearish."

as has been repeated here daily ad nauseum.

The end is near, yet where have we gone for the last eight years?

Technical analysis? Why don't we go into months of debate on the San Andreas fault and the imminent slide of CA into the ocean?

Reminds me of a time twenty years ago when an employee talked me into going into a seedy tit bar in the NE. I was amazed as I saw a middle aged man sitting at a platform with a dancer waving her privates in his face, he intently staring into it as though it spoke to him.                      Anal-yzing

I'm sure that many who use chicken bones to predict future events see it as very technical as well.

In reply to by Iconoclast421

ProstoDoZiemi Brak82 Tue, 03/06/2018 - 01:34 Permalink

I'm only here for the comments, there are a lot of smart people congregated here in this forum if that's what you want to call it, and they understand how mechanisms work, I know far too many that talk and just blow air out of their asses thinking they know a lot....

The articles, eghhh some are good, the weekend doom ones I avoid, I'm out having fun with family or friends or trying to get the white russians banned from my kremlin at social hotspots  ; )

In reply to by Brak82

Dragonsgrace Oldwood Mon, 03/05/2018 - 20:17 Permalink

In the long run, Zerohedge might be right.  The issue in investing is being right at the right time.  In that area, Zerohedge has totally blown it.  Being "right" is nice but making money is even nicer.  The truth is that Zerohedge has been more wrong than right over the last 8 years.  That results in a lot of money left on the table.  Glad I did not listen...that much

In reply to by Oldwood

GoysRUs18 Oldwood Mon, 03/05/2018 - 21:01 Permalink

IMHO that was the plan all along for ZH

A Judas goat is a trained goat used in general animal herding. The Judas goat is trained to associate with sheep or cattle, leading them to a specific destination. In stockyards, a Judas goat will lead sheep to slaughter, while its own life is spared. Judas goats are also used to lead other animals to specific pens and onto trucks. They have fallen out of use in recent times, but can still be found in various smaller slaughterhouses in some parts of the world, as well as conservation projects.[1]

Cattle herders may use a Judas steer to serve the same purpose as a Judas goat. The technique, and the term, originated from cattle drives in the United States in the 1800s.[2][3][4]

In reply to by Oldwood

GooseShtepping Moron Oldwood Mon, 03/05/2018 - 21:50 Permalink

Zero Hedge does not offer investment advice. It offers news, commentary, and a place to discuss things.

But with that being said, unless you actually disagree with the proposition that the policies pursued by the major governments and central banks of the world have had, and will have, deleterious effects on the economy, then the general tone of Zero Hedge has been both accurate and informative.

At least we who frequent this place have some sense of what's going on in the world. How many people out there in normal America, do you think, have no idea what QE is or why it's a problem? How many don't even know about the federal debt? How many don't know that their pensions are insolvent? How many don't know anything at all about Chinese industrial production, inverse VIX ETFs, the Eurodollar funding crisis, record margin debt, LIBOR, cryptos, Russia?

Feel free to make whatever investment decisions you think are right. Zero Hedge has always been a great place to get a sense of things that the mainstream media never talks about.

In reply to by Oldwood

Exponere Mendaces Oldwood Mon, 03/05/2018 - 23:42 Permalink

Don't forget the absolute zero that was "Shemitah".

ZH jumps on every fucking bear story with gusto, then handwaves when it doesn't pan out.

Meanwhile, they're zooming in to the tick-level on price charts to make movements look more dramatic, a financial-tabloid-esque move to "enhance" their stories. Not to mention the "lets take two unrelated things and put their charts on top of each other" move, to suggest correlation where none exists.

Its a fucking joke, just like Gold.

In reply to by Oldwood

helloimjohnnycat Mon, 03/05/2018 - 20:08 Permalink

re the bimbos who ran from his sweaty & infected joo cock, Weinstein could say the same thing.

Never compromising integrity & always using the noggin wins the day.

White people in USA will either keep their backbone, find it again ?, or suffer.


Vandemar Mon, 03/05/2018 - 21:48 Permalink

Would you say there is a possibility, or a probability, that the S&P stops at this bullshit elliott wave fibonacci fractal wave line of 2449?

ZERO.  There is a ZERO percent chance the S&P decline stops at 2449.

NVTRIC Mon, 03/05/2018 - 22:47 Permalink

I predict the market will go down.  Then back up.  Then down.  Back up.  


It appears to like making pointy things in the charts.  


Charts and deer in the headlights FTW!

hibou-Owl Tue, 03/06/2018 - 03:05 Permalink

The article states that the count represents a 5,3,5 corrective pattern.

For this to be the case it would be a corrective pattern of an overall impulsive (bullish trend). Therefore the 5,3,5 pattern forms either a wave two or wave four, or possibly a corrective pattern before an extended wave five.

When you look at the preceding impulsive pattern, there's clearly five waves up, so the current corrective pattern is not wave 2 or 4. Looking at the parabolic nature of this impulsive pattern it is unlikely to extend, 

So yes GOLDMAN is right in expecting a sell off, but the evidence suggests they have the count wrong. This is highly likely that a trend change has occurred, and an impulsive five wave count is in play not an ABC. I suggest a target of 14000 on the DOW which is 61.8% of the previous impulsive run. 

Looking at fundamentals FED reversal, and bond rates climbing then we won't continue this bullish trend.

Nelbev Tue, 03/06/2018 - 04:42 Permalink

Goldman Warns SPX in corrective stage. What BS to sell to retail on a chart with a crystal ball.

I remember those MBS GS was recommending as good deals while doing opposite and dumping their own portfolio right at beginning of 07 housing crash.

So I guess this is a GS buy signal.