The S&P 500 has recovered almost all of what it lost in Minuette (a) and is consolidating in a horizontal move. The hourly MACD has crossed over above the zero line as well as the support resistance line (in red). It might be possible that a triangle is forming on the S&P 500 with the a wave done an b wave in progress. This whipsaw is really tough to analyse.
S&P 500 Elliott Wave Analysis Chart 12 Mar 2012
S&P 500 Fibonacci Confluence
The current Fibonacci band has been breached and S&P 500 is sitting above the band.
S&P 500 Daily Fibonacci Chart 12 Mar 2012
S&P 500 Volume and MACD
Volume is getting thin. The daily MACD is flattening.
The recovery picked up pace and has now retraced 78.6% of Minuette (a). Looking at the details of the recovery, it is looking impulsive as well and so far 9 waves in total can be counted with a clear extended third wave. This could be part a of an a-b-c zig-zag correction. This would mean that the correction is not over yet and the stock market will make a down move in the form b wave and finally the c wave which should bring the S&P 500 above 1368.
The wave that is labelled as Minuette (a) could also be a flat correction which is the final leg of the expanding triangle. The implication is that we might see another high above 1378.
S&P 500 Elliott Wave Analysis Chart 08 Mar 2012
The hourly MACD has broken through the zero line and has touched the bottom boundary line of the contracting triangle. If it had been turned down at zero line, it would have confirmed that the S&P 500 is in a correction and is likely to head lower. But since it has broken through the zero line, there is a possibility that the S&P 500 might just head higher and reach another high above 1378.
Another possibility is that a leading diagonal is panning out with a 5-5-5-5-5 pattern. If this was the case, it indicates that the S&P 500 has turned down and the peak of 1378 would not be visited again in the near term.
There are a number of things that’s going on at the moment and we need the waves to play out a bit more before deciding on the most likely outcome. For now, the scenario painted in the below daily chart is still valid.
S&P 500 Daily Elliott Wave Chart 08 Mar 2012
S&P 500 Fibonacci Confluence
The S&P 500 broke through the Fibonacci band and has closed above it. This is also another bullish indication.
S&P 500 Daily Fibonacci Chart 08 Mar 2012
S&P 500 Volume and MACD
The volume is thin again. The bulls are not ready to commit or don’t have enough strength at the moment. The daily MACD is turning up which is typical for a correction.
The recovery is slow and weak compared to the impulsive wave that the stock market exhibited in the previous session. This is a clear confirmation that the stock market has turned down. The S&P 500 is likely in wave four at moment. One more leg down to complete Minuette (a) is expected.
S&P 500 Elliott Wave Analysis Chart 07 Mar 2012
The target for end of Minuette (a) is 1335. Thereafter, Minuette (b) is expected to bring the S&P 500 back to 1350 region. This would be followed by Minuette (c). There are two possible targets for Minuette (c). The first one is 1310 where wave (c) = wave (a) (bounded by the blue line of the contracting triangle). The second one is at 1290 where wave (c) = 1.6 x wave (a) (bounded by the red line of the alternate triangle). I am leaning towards 1290 at the moment but we need to watch 1310 as well.
S&P 500 Daily Elliott Wave Chart 07 Mar 2012
S&P 500 Fibonacci Confluence
The S&P 500 tried to move back up the Fibonacci Confluence Band and got turned down at 1352. The 1352 is a Fibonacci retracement that has turned from resistance to support previously. It looks like it has now changed back to resistance.
S&P 500 Daily Fibonacci Chart 07 Mar 2012
S&P 500 Volume and MACD
The volume is back to thin again. This is typical of waves four where consolidation is taking place. The MACD is continuing its pattern of turning down. It is clearly heading for the zero line.
Elliott Wave Analysis 