Elliott Wave Analysis of S&P 500 – 07 May 2012

There was a big sell off in Asia caused by the election results in France and Greece as well as the Non-Farm Payroll data which was below expectation. In Europe and the US however, the stock markets chose to close sideways mostly. This is probably because the US had sold off on last Friday. What does the Elliott Waves Analysis looks like for the S&P 500? I had anticipated a small leg down before the S&P 500 would rise again. We got that small leg down but the rise has been weak thus far. The market seems to be spooked and shaken a little.

The primary count is that we have now completed Minute wave [x] and the first waves of Minute wave [z] are forming. The alternate count is that the S&P 500 has already formed Subminuette i and ii of Minute [z] and is in the early phase of Subminuette iii. Both these counts are bullish.

S&P 500 Elliott Wave Analysis Chart 07 May 2012

On the bearish side, the Head and Shoulders formation is still valid and a possible count is that we have waves 1-2-3-4 of a downwards move. We can expect a small leg down before the S&P 500 heads higher to form the corrective wave of this move down.

Either way, the most likely move is in the upwards direction. We would need to see the character of the move to determine whether is it a bullish or bearish move.

On the daily chart, I had previously mentioned about the blue support line that has held since Oct 2011. Well that line has been breached and S&P 500 has now closed below that line for two days now. The bulls would need to bring S&P 500 back up above the blue line soon.

S&P 500 Daily Elliott Wave Chart 07 May 2012

S&P 500 Fibonacci Confluence

The S&P 500 came close to the next lower Fibonacci level at 1362 and moved higher.

S&P 500 Daily Fibonacci Confluence Chart 07 May 2012

S&P 500 Volume and MACD

The volume is thin. The daily MACD has moved into negative territory.