S&P 500 5 Year Elliott Wave Analysis – Approaching a Major Target – 05 May 2012
The Primary 5 Year Elliott Wave Chart for S&P 500
This is a 5 Year Elliott Wave Analysis of S&P 500 tracing the fall from the top of 2007 (1576) to a low of 667 in 2009 and the rise back to 1367 where we are right now. The below chart is the Primary Elliott Wave Count of S&P 500. It depicts the fall from 2007 till 2009 as a five wave impulsive wave. This wave structure is a clear cut impulsive wave which is also supported by the MACD and Volume. I am labelling this move as Primary wave [A] with sub waves of Intermediate (1) – (5). Primary A was a swift and powerful drop typical of impulsive waves.
The recovery from 2009 low is still on going and as can be seen from the chart, it is much more slower and gradual. The MACD has not kept pace with higher highs recorded in the price of S&P 500. This is a clear signal that this recovery is with weak momentum. The volume is also telling as the volume is reducing with each upwards phase. All this is pointing to a weak recovery.
This recovery phase is labelled as Primary wave [B] with sub waves Intermediate (W)-(X)-(Y). In this chart, I have labelled it such that the Inter wave W-X as completed and Inter wave Y is still progressing in an Expanding Triangle formation. This Expanding Triangle is further sub divided into sub waves Minor A-B-C-D-E with wave E in progress. It is also possible that this Expanding Triangle is actually Inter wave (X) which means the current leg up is actually the Minor wave D and this will be followed by another leg up in the form of Inter wave Y after the Expanding Triangle completes.
Either way the the next likely move after the current leg up ends is a move down. The difference would be in the target for the move down. The minimum target is around 1150 region. The expanding triangle is also supported by the guideline of MACD that is oscillating about the zero line.
The Alternate 5 Year Elliott Wave Count for S&P 500
The below chart is the Alternate Count and in this count, the Expanding Triangle is depicted in a much larger megaphone structure. This count is losing likely hood fast as the Minute wave [b] is extending to high up and getting away from the previous high which is the Minor wave C. In this count, the S&P 500 is expected to hit a low of 1000 points before embarking on the final leg up in the form of Minor wave E to complete Inter wave (Y) and Primary Wave [B]. There after, it would be a plunge to below 1000 points.
In summary, it is clear that the topside for S&P 500 is limited to a maximum of 1550 in the near term. This is what I’m tracking on a daily basis currently. The downside probability though is very deep. This also coincides with the situation of the problems that is plaguing the world. The unemployment issue is still a major issue and the European debt crisis is just beginning to unravel. The next dent (or blow) is the housing bubble in China and the rest of Asia that is still building up and is yet to burst.
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