Friday, June 11, 2010

SP Friday

It's that time of the week again, here's my updated count;
click to enlarge
The imminent 3, of -3- of 3 etc is taking it's time to show up, and (not to be too obvious) the SP is still at high risk a of major meltdown, with the potential to continue it's sell off at any moment.
Note the last c structure consists of two equal legs of 36.50, running into trouble at the .62 retrace point of 1.

Why isn't this just a correction down of a temporarily overbought market that is recovering from a crash and headed to new highs?
Quick review:
The historic 2007 high of 14700 was a "grand super cycle high". Some clear Elliott/ Fibonacci  points are relevant: that 2007 high was 7414 points up from the 2002 low of 7286, or .62 of the 1974 to 2000 rally, 575 to 11700, completing an easily seen 5th wave up. And that 5 up move from 1974 is the 5th wave of the move up from the 1931 low. And I doubt many will argue the significance of the subsequent crash down .
Why it's not over;
 click to enlarge
The rally up off the lows retraced exactly .618 of the move down. That is very normal for a 2 wave back; deeply retracing the initial move down. The fact that it halted at that Fibonacci point supports the case for the wave structure interpretation.
On the surface it looks  like 5 legs up from the SP lows of 666...but it's not.
 
The structure in the position of the "3rd wave" ( boxed above) actually has none of the characteristics of an impulse wave. Note the declining volume and consistent series of overlaps with no accelerating waves.
And while there are a variety of ways to label the move up, they are all variations of abc structures .
So there is a very high risk of that being a corrective structure, and a complete wave 2, implying lower lows under 666.

Note the declining volume into the high, the explosion of volume on the sell off, the resistance at the 200 wk MA, the failure of the 50 wk MA to hold it, the overlap of the previous low, and the roll over of the MACD  (check out the previous cross down).

Good Luck
















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