S&P 500 Elliott Wave Analysis – 09 May 2012

There was another big 20 points drop on the S&P 500 before it recovered to close 9 points down. Clearly the red support line is being attacked and the bulls are fighting back the bears assault. This red support line is now the key to a move on the either side. The Elliott Wave counts remain unchanged as this leg down is likely the final leg down for Subminuette y. The move up that came in after Subminuette y is an impulsive wave up. It is quite likely that the bulls will continue upwards from here on.

S&P 500 Elliott Wave Analysis Chart 09 May 2012

On the bearish side, it could also be argued that the market has paused at these levels and could head further down. As mentioned before, the red line is the key for now.

On the daily chart, we can see that in the previous session there was a strong reversal candle with a large wick and a small body. But in today’s session, the wick has gotten shorter but the body has gotten bigger indicating weakness. Volume seems to be slowly inching up on the way down which is another cause for concern for the bulls. Another point to note is that the blue support resistance line that had was formed based on the Oct 2011 and Nov 2011 lows has been breached and the S&P 500 has managed to close below it for the last 4 sessions. The market must close above this line within the next two sessions to to recapture this line.

S&P 500 Daily Elliott Wave Chart 09 May 2012

S&P 500 Fibonacci Confluence

Once again the Fibonacci band at 1350 was breached and the S&P 500 recovered back from there.

S&P 500 Daily Fibonacci Confluence Chart 09 May 2012

S&P 500 Volume and MACD

The volume is slowly inching up on the way down. The daily MACD is clearly turning down again.