alternate view

S&P 500 EOD Review 14 Dec 2011

The S&P 500 is slowly edging downwards. The last 2 down moves are impulsive and this could be counted as 1-2-i-ii type of move but I think that it is actually a zig-zag which completes the leg e of the Expanding Triangle. But there is still no divergence on the MACD to the upside.

This down leg has retraced 50% of the previos up leg. The 61.8% retracement is at 1200.

S&P 500 EOD Elliott Wave Chart 14 Dec 2011

If the market is poised to move higher, buying should come in soon. Otherwise, the bears are going to win and a sharp sell down can be expected.

The 1-2-i-ii type of move is unfolding which is setting the stage for a 3 of 3 powerful move down. Reason why I’m still not buying the 1-2-i-ii move is because the down moves are not as strong as the previous upwards moves that we saw on 28 and 30 Nov 2011. Therefore this leg down is looking relatively weaker and does not support the notion that we are in 3 of 3.

There could be a horizontal Triangle forming on the daily as well with this final move leg e of the Triangle.

S&P 500 Fibonacci Confluence

The Fibonacci Confluence band at 1220 – 1228 got penetrated and the S&P 500 stopped at the next band which is 1210. As mentioned yesterday, this type of move is not looking good for the bulls.

S&P 500 Daily Fibonacci Chart 14 Dec 2011

S&P 500 Volume

The volume is picking up with the selling. This is also quite bearish and we could see the S&P 500 heading lower still.

S&P 500 EOD Review 13 Dec 2011

The final leg e of the Expanding Triangle is in place and the next likely move is upwards. Note that the top of the Triangle (blue line) that was formed from 27 Oct till 15 Nov has been tested a few times and it has provided support so far. A divergence on the MACD is developing indicating that the selling is losing momentum even with increased volume. Market is going to move up from here.

S&P 500 EOD Elliott Wave Chart 13 Dec 2011

Alternate View

The Alternate view is that the S&P 500 is in Submicron 3 of Subminuette iii. Being 3 of 3, it should be a strong move but that is not happening which is why this is the alternate view. Also, this move is looking quite choppy. But note that the S&P 500 is slowly edging lower. It could just result in a major sell off if any bad news or some negative development takes place.