The S&P 500 headed lower and invalidated the 1-2 count that I had. The S&P 500 is still in the final leg e of the Expanding Triangle with the a portion of the a-b-c zig-zag done and b in progress. The b is likely to progress to about 1241 and then we can expect the c leg in impulsive pattern down to around 1225.
The MACD is getting weaker and the expected break through the zero line to the top did not materialise.
S&P 500 EOD Elliott Wave Chart 12 Dec 2011
Alternate View
The Alternate view is that the Subminuette iii has started with Submicron 1 and 2 completed and Submicron 3 in progress.
S&P 500 Fibonacci Confluence
The top of the Fibonacci Confluence band at 1219 – 1228 was tested and the market moved slightly higher but no able to retrace the down move.
S&P 500 Daily Fibonacci Chart 12 Dec 2011
S&P 500 Volume
The volume is decreasing still and this is typical of consolidation phase.
The Expanding Triangle theory has held so far. The market moved higher after the completion of the final leg e of the Expanding Triangle. My view is that the move up in the last session is Submicron 1 of Minuette (y). We can expect Submicron 2 to kick in next and probably go as low as 1242 – 1245 before moving higher in Submicron 3 with a target of 1287. There is a lot of uncertainty in the market currently and a lot of people as sitting on the sideline. Once the S&P 500 moves above 1266, we can expect a lot of bulls to jump in resulting in the index moving higher.
S&P 500 EOD Elliott Wave Chart 9 Dec 2011
The MACD as expected came down to zero line and is now turning up. This is a bullish sign. We can expect the MACD to go a bit lower from here (Submicron 2) and then move up again. That would make a nice double bottom on the MACD and set the stage for higher levels.
Alternate View
The Alternate view remains that we are in Micro [2] of Subminuette iii or have completed Micro [2] and we can expect a sharp sell down from here. This view is on the verge of getting erased. If the S&P 500 moves above 1277, this count will be invalidated.
S&P 500 Fibonacci Chart
The S&P 500 moved through the next Fibonacci Confluence band at 1252 -1254 and is sitting pretty right on top of this band. The next band to the top is 1282 – 1296. My target for Submicron 3 is 1287. So we can expect Submicron 3 to poke at this band and come down in Submicron 4 before moving higher again in Submicron 5 which would fail at this band. This band would likely be taken out in the next push up which would be Micron (3). There’s still some way to go before that and we’ll just monitor the immediate moves for the time being.
S&P 500 Daily Fibonacci Chart 9 Dec 2011
S&P 500 Volume
The volume is light and that clearly shows the uncertainty. Low volume can also be trigger points of major moves in either direction. So we need to be careful here.
The expected final leg e of the Expanding Triangle has panned out. This signals the end of Minuette (x) and the market is expected to move higher from here. Note though that if the triangle breaks to the bottom, the target is 1206. This is still a possibility. This area is also the top of the previous Triangle. The market has found a good support region.
The MACD has crossed the zero line and this could mean a bearish scenario. But my view is that it now has a lot more room to go up before reaching over bought levels. Minuette (y) is expected next with a target of 1340 (if (y) = (w)) or 1400 (if (y) = 1.6 x (w)).
S&P 500 EOD Elliott Wave Chart 8 Dec 2011
Alternate View
The Alternate view remains that the recent move up is Micro [2] and Micro [3] is expected next. As mentioned earlier, this is very close to being invalidated.
S&P 500 Fibonacci Confluence
The S&P 500 is fast approaching the major Fibonacci Confluence band at 1220 – 1228. My take is that the market will move higher without even touching this band.
S&P 500 Daily Fibonacci Chart 8 Dec 2011
S&P 500 Volume
The volume is still average as the S&P 500 headed lower. This is a normal correction. Need to watch the move in the next session for confirmation.
Elliott Wave Analysis 