Each candle on the SPX chart below represents 1/4 of one year.
- Q1 2015 is a spinning top candle (indecision)
- Q2 2015 is a shooting star (bearish warning)
- Q3 2015 is a bearish engulfing (bearish but needs a confirmation lower close)
- Q4 2015 is a bullish piercing pattern reversal candle, but such a candle is more effective after a decent drop, rather than stuck in a consolidation pattern at all-time highs
- Q1 2016 is a bearish hanging man (bearish but also needs a confirmation lower close on the next candle)
- Q2 2016 is an important candle, which will close this Thursday, June 30th, as it could be the bearish reversal confirmation candle that's needed for the Q1 candle -- a lower close is required
* UPDATE Thursday, June 30th:
As shown on the following updated 20-Year Quarterly chart of the SPX, the 2016 Q2 candle closed today at a higher level than -- on what was a previously potential bearish hanging man -- the Q1 candle. This bearish reversal warning was not confirmed.
Instead, what we're left with, at the moment, is a wide-range high-base consolidation for the past 6 quarters, with price now near all-time highs.
As shown on the following 20-Year Monthly chart of the SPX, a solid breakout and hold to the upside of this large range could produce a rally to a confluence of the top of a long-term channel and a 200% Fibonacci Extension level of 2280 (yellow) by roughly October of this year, and, eventually, another confluence of the channel top and a 200% External Fibonacci level of 2485 (blue) by approximately December 2017.
That's a very bullish scenario and one that may take quite a bit longer to play out, with, possibly, a lot more volatility sprinkled into the mix than what I've shown...anything can happen between now and then, but the potential is there, nonetheless.