Wednesday, May 30, 2012

SP 500- Trend Resumed

OK, hopefully everyone's on the right side of all this. There was ample opportunity.
Pls see the previous post from Mon. May 21st. Opportunities Abound
in which  the slight corrective action of last week was both anticipated and qualified. 
More to the point.... what now?

The equities markets look ready to make new lows, after a pretty classic consolidation, and the only question is by how much.  On the daily and weekly charts they are not even oversold, let alone showing positive divergence.

Daily
 click to enlarge
The bounce DID retrace  .618 of the preceding leg, quite unusual for a 4th wave, so potential for the bounce to be another (2) wave of lesser degree has to be considered;  that would imply considerable downside as the 3rd wave unfolds.
Weekly
click to enlarge
Keeping it simple lets say the bounce was a 4th wave of something.
Note how SPX found support at the .382 retrace of the Z wave as labeled in the preceding post
New lows for the 5th wave of -1- of 3 might find support at the 50% retrace of Z, around 1248.

But whether 1250 or 1150, between Europe/ China/  JPM .and the very long term Elliott count, corrections from oversold conditions at this point should be eagerly awaited as the increasingly rare opportunities they will become.

From the April 16 post SP500 Alert

"The 50% retrace of the last move up from 1078 is around 1248.
The .618 retrace of 666 to 1422 is at 955."



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