S&P 500 Elliott Wave Analysis – 10 May 2012 – A Big Move is Coming


S&P 500 Elliott Wave Analysis – 10 May 2012 – A Big Move is Coming

I published an article on 03 May 2012 suggesting that a big move is coming soon as a lot of the charts that I track are pointing to mid May 2012. I attach here the extract of the article.

In Oct 2011, I was getting bullish signals from Asian indices but the S&P 500 was bearish. It was a point of inflexion where I could not tell for sure which way the market was going to go. It turned out to be bullish. Currently, I am getting bearish signals from Asian indices and counters that I’m tracking, but the S&P 500 is still bullish as it is pointing to 1475 or even 1550 as the next target. It is once again at a point of inflexion and one needs to watch the markets closely to stay safe. One of the most difficult forecast is pin pointing the exact time of a market turn, but, a large number of my charts are pointing to a big move in mid May time frame. When the majority of charts points to a single area, it must be taken seriously.

You can refer to the article here.

I believe that the markets have reached a high point at 1422 with all the might the bulls have. The market has been waiting for QE3 to go further and since QE3 is off the table for now, it does throw a very bearish tone on top of the bearish view due the elections in France and Greece. The surprising part is that the S&P 500 did not head south strongly with such bearish tone and this throws a big spanner in the works. Let’s take a look at the technicals to see where the stock market stands.

S&P 500 Technical Analysis Chart 10 May 2012

S&P 500 Elliott Wave Analysis Chart 10 May 2012

The S&P 500 is now sandwiched in a zone between two important support resistance lines. Firstly, there is the neck line of the Head and Shoulders formation to the topside and secondly, is the red support line of the Expanding Triangle scenario. The S&P 500 is now ranging between these two lines and it is hard to tell which direction it is heading to. We can try to make use of the previous waves to give us clues to this question. Thinking along this line, the previous wave is a clear impulsive downwards wave and this ranging action is looking corrective. Based on this it points to further downside.

Going back further to the action from early April as the market moved down from 1422, we can see that the move down has been impulsive and stronger than the upwards retracements which is looking corrective and choppy. Still, it is hard to point to a clear direction.

S&P 500 Daily Elliott Wave Chart 10 May 2012

S&P 500 Daily Elliott Wave Chart 10 May 2012

At this juncture, it is best to wait for further action and a clear direction before taking any positions. A break below 1340 will confirm the Head and Shoulders formation with a target around 1290. And a break to the upside in a clear and strong impulse will point to further upside to 1475. I believe that we will likely see a big move by early next week.

S&P 500 Fibonacci Confluence

The S&P 500 is now sandwiched between two Fibonacci levels of 1352 and 1362.

S&P 500 Daily Fibonacci Confluence Chart 10 May 2012

S&P 500 Daily Fibonacci Confluence Chart 10 May 2012

S&P 500 Volume and MACD

The volume is once again thin. The MACD has clearly turned down and head south.

Do tell me what do you think about the article. I would be delighted to hear your views.

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About Shivakkumar Vadiveyl

Shivakkumar Vadiveyl is a blogger who helps Investors get better in Investing by publishing Articles on Investment, Retirement Planning, Gold, Silver, Stocks and Currency Markets. He uses Elliott Wave Analysis, Classical Trend Channel and Candlesticks as the Primary Analysis Tool.