Elliott Wave Analysis of S&P 500 – 26 April 2012

Upwards move has continued into this session and closed at 1400. Now we have clear five wave impulsive upwards move. I was expecting a correction in this session before an assault at 1422 as the big battle between the bulls and the bears is anticipated at 1422. But, the S&P 500 headed right into 1400. There is a very high chance for a correction in the next session. The target for the correction is 1375 – 1381 region. The correction should be a zig-zag as waves 2 are typically zig-zags. That would give us confidence that the wave 3 will follow wave 2. As said earlier, the battle would be at 1422.

On the downside, the bearish view is supported by the fact that this move up got stopped right at the trend line that runs parallel to the neck line of the popular head and shoulders pattern. The strength and formation of the anticipated correction would confirm whether the bullish view or the bearish view is the most likely one.

S&P 500 Fibonacci Confluence

The next Fibonacci level to the top side is at 1418 and the Fibonacci level to the bottom is at 1381.

S&P 500 Volume and MACD

The volume is still thin. The daily MACD has started to turn up and just a whisker below the zero line.