S&P 500 Elliott Wave Analysis 08 March 2012

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.

S&P 500 Elliott Wave Update 06 March 2012

The S&P 500 made a relatively big move in the last session. It was down by some 1.54% or 20.97 points to close at 1343.51. This move is an impulsive move as can be seen quite clearly. It could also be the c wave of a flat a-b-c correction. So it could still move higher from here. But looking at the technicals, the anticipated break out of the hourly MACD finally took place and I had said that it would be a vigorous break out. It has also broken the zero line on the hourly MACD which has provided support since 28 Dec 2011.

S&P 500 Elliott Wave Analysis Chart 06 Mar 2012

This wave on the S&P 500 has also broken the lower boundary of the expanding triangle. Looking at the wave structure and the hourly MACD, I anticipate a correction once market opens to 1350 before at least another down leg to 1335 region. This would complete the a wave of the a-b-c correction as depicted in the daily chart below. Note that I’m expected another leg up in the form of Minute [z], which should take the S&P 500 to 1450 or even 1500 region, once this correction is over.

S&P 500 Daily Elliott Wave Chart 06 Mar 2012

S&P 500 Fibonacci Confluence

The S&P 500 dropped right into the Fibonacci band at 1338 -1362 and recovered to 1343. The 1338 level seems to have stopped the down move. But I expect that to be broken in the next session.

S&P 500 Daily Fibonacci Chart 06 Mar 2012

S&P 500 Volume and MACD

The volume is relatively higher that the previous days and is marginally higher than the recent average. Daily MACD is turning down more vigorously. It is heading for the zero line (refer to the 2nd chart on top for the S&P Daily Elliott Wave Chart).

S&P 500 Elliott Wave Analysis 05 March 2012

The important development is the move out of the triangle on the hourly MACD. It has also broken the zero line and moved below that. This could turn out to be a throw under before the market heads higher. The S&P 500 has registered a downward move which looks impulsive. It could also turn out to be a flat or zig-zag correction. The immediate target is 1350. If that breaks, the next target would be 1293.

S&P 500 Elliott Wave Analysis Chart 05 Mar 2012

The daily Elliott Wave Analysis Chart depicts the target of 1293. This move has also broken the red support line that has been holding since 29 Dec 2011. Another significant move.

S&P 500 Daily Elliott Wave Chart 05 Mar 2012

S&P 500 Fibonacci Confluence

This recent downwards wave has brought the Fibonacci back into the Fibonacci band at 1338 – 1362.

S&P 500 Daily Fibonacci Chart 05 Mar 2012

S&P 500 Volume and MACD

Volume is still light. The daily MACD is turning down more profoundly now.

S&P 500 Daily Volume Chart 05 Mar 2012