Summary: <br> The S&P500 started 2015 pretty much exactly where we are today — around the 2030-2050 region. We went as high as just over 2110 to as low as just below 1850.<br> But the numbers don’t tell the full story. Here’s a look at the chart — as well as our Elliott wave count on the structure of what occurred this past year.<br> S&P500 Daily Chart for All of 2015:<a href="http://www.lifestyletrading101.com/wp-content/uploads/2015/12/2015-sp-review2.png"><br><br> </a><br> <a href="http://i2.wp.com/www.lifestyletrading101.com/wp-content/uploads/2015/12/2015-sp-review3.png"></a>The above chart is the S&P500 from December to December in 2015.<br> So What Happened in 2015?<br> Basically, we spent most of the first half of the year finishing that last 5th wave that began from the drop in October 2014. The second half of December 2014 was a massive rally Santa Rally (even bigger than <a href="http://www.lifestyletrading101.com/2015/12/24/thursday-122425-santa-rally-i-hate-5th-wave-extensions/">the one from this month in December 2015</a>.<br> 2015 began with a drop in wave pink II — which set the stage for the ending diagonal for the next several months. We had a I-II-1-2-3-4-i-ii-iii-iv-v play out — an ending diagonal within an ending diagonal. Then we came out of that ending diagonal with an a-b-c pink IV four — and then finally finished it with a last thrust up in a wave V over 2100.<br> Whether that last thrust wave V was technically higher than the wave II from mid-May is inconsequential. In terms of pattern structure, the high in mid-July is considered the completion of this ending diagonal.<br> From that top, we experienced a yellow a-wave pull back followed by a b-wave rally — and then a leading expanding diagonal orange wave 1 — that can be broken down into 1-2-3-4-5. Then we got an a-b-c wave 2 retrace to near the top of that diagonal.<br> That’s what preceded a major wave 3 drop — in what appears to be an orange wave A in August of 2015.<br> For the second half of 2015, e experienced what appears to be a corrective B-wave that pretty much went all the way back to the highs over 2100<br> S&P500 Weekly Chart from 2011 to 2015:<br> <br> <a href="http://i0.wp.com/www.lifestyletrading101.com/wp-content/uploads/2015/12/img_0360-1.png"></a>S&P500 Weekly Chart from 2011 to 2015<br> My S&P500 Outlook for 2016<br> Well, as you can see from the above weekly chart — I believe the yellow A drop and B-wave rally has finished — and we are forming the foundations for what may become yellow wave 1 down.<br> As I write this now, we may potentially have a <a href="http://www.lifestyletrading101.com/elliott-wave-corrective-a-b-c-wave-2/">corrective A-B-C wave 2 </a>, –which usually results in a wave 3 down — as long as 2060ES does not get breached in this last week of December.<br> Judging from the pattern in the Russell2000 — I see a clear 5 waves down and 3 waves retrace — which gives me further confidence that downside is to follow.<br> I am a little hesitant about making this downside call in the near-term, because another prominent Elliott Wave site is predicting the exact opposite — a 1-2-i-ii highly bullish move to the upside.<br> But because we spent the entire first half of 2015 in an ending diagonal within an ending diagonal — I don’t think we will break into new highs. The August 2015 drop also does not seem resolved yet until we get a C-wave down.<br> I also think the pattern in the last two weeks is more representative of the corrective A-B-C wave 2 flat — rather than the 1-2-i-ii setup.<br> A= 3-wave move<br> B= 3-wave move<br> C = 5-wave move with extension<br> This 3-3-5 structure matches the corrective wave 2 pattern more.<br>
