Another indecisive day with low volume. The trading range is getting very narrow and would likely remain so until next week when most people come back from their holiday. The S&P 500 would likely stage a major move then. But it could go either way so caution is needed.
My count is still labelling the move up from 19 Dec 2011 as a Subminuette b and Subminuette c is underway to 1205 region.
S&P 500 EOD Elliott Wave Chart 28 Dec 2011
S&P 500 Fibonacci Confluence
The S&P 500 pierced through the Fibonacci band at 1252 – 1255 and came back down and closed right below this band.
S&P 500 Daily Fibonacci Chart 28 Dec 2011
S&P 500 Volume
The volume is very light with a lot of people still in holiday. Any major move can only be expected next week.
A lot of stock market technicians are calling the recent low of 1074 as stock market bottom and are calling for a reversal upwards. Their main count is depicted in the following chart. This to me is the Alternate count. I think that the stock market has not bottomed yet and one more selling cycle is in store. My primary count is depicted in the following section. This Alternate count will be invalidated if it falls below 1074.
S&P500 Short Term Alternate Count
This is my Primary count. The recent horizontal move is still in progress and is depicted as w-x-y-x-z with the z in progress. This would complete Minute (iv) after which Minute (v) will come in to set a new low below Minute (iii). The expected move for z wave is 1240. There is resistance at 1207 which has held 3 times so far. One of the reasons why I think that this is the more probable count is because if this is the turn of the stock market, it has to come after some heavy selling but volume has not been heavy. The recovery is also quite choppy and a clear flat can be identified.
S&P500 Short Term Primary Count
Another reason why I think that there is still one more sell off cycle is because HSI (Hang Seng Index – Hong Kong) is doing the final wave 4 to be followed by the wave 5. HSI is has been impulsive and the waves have been following textbook EW. So it is much easier to count. This down trend which started in May 2011 has affected almost all major stock markets and Asia has been affected as well. So the trend change will affect all stock markets as well. Here’s the review of the HSI.
Take a look at the below intraday chart and see the wave 1 (red section). Although 5 waves can be counted in this pattern, it does not look impulsive to me. It looks rather choppy. Also, there is no alternation with sub wave 2 and sub wave 4. Wave 2 (blue) looks like an Expanding Triangle which is not common for wave 2. Triangles normally appear in waves 4, X or B. So this looks to me as a flat corrective move rather than an impulsive wave 1. This count would be invalidated if it hits 1296.
Elliott Wave Analysis 