Capitaland brokeout on the side from the channel line and came close to testing this channel line but did not touch it. This is a bullish sign. The move so far is labelled as Minute [i]-[ii]-[iii] with wave [iv] in progress probably in a Triangle. The next move is Minute wave [v] which is target at 2.90 region. There is resistance at 2.75.
11 Nov 2011 Capitaland Primary Elliott Wave Chart
MACD
MACD is turning down and I believe that it will approach the zero line before turning up which is bullish.
Volume
This whole move is confirmed with volume as the up waves were with higher volume and the down waves with lower volume.
Alternate View
The Alternate view is that the move up is Minute wave [w-x-y] which has completed and the move down has started with Minuette wave (i) completed and Minuette wave (ii) is in progress. This is a low probability move but with issues in Europe and US, the markets could turn down so watch the markets closely for signs of this.
11 Nov 2011 Capitaland Alternate Elliott Wave Chart
STI got sold down heavily end of last week similar to HSI. The volume of selling is very heavy and is most likely the final blowoff selling. Here’s the Primary Elliott Wave Chart. The Primary count is that Minute wave [i] and [ii] has completed with Minute wave [iii] in progress. The next expected move is Minuette wave (iii) of Minute wave [iii]. The target for this move is 3100 region.
11 Nov 2011 Primary Elliott Wave Chart
Alternate View
This is the Alternate view for STI which is a bearish view. The move up so far is a Intermediate wave (2) and the recent down move is the beginning of Intermediate wave (3). Minute wave [i] and [ii] of this move has completed and Minute wave [iii] is in progress.
11 Nov 2011 Alternate Elliott Wave Chart
I’m expecting the STI to move up next in a relief rally from last week’s selldown. The character of the relief rally will help us determine whether the next move is going to be bullish or bearish.
Let’s first take a look at the 3-Month chart of the S&P 500 because there are a lot of things happening on this chart. There is a top channel line (red) and a bottom channel line (blue) formed since mid Aug 2011. The top line was tested three times and it did not break. The bottom channel line did break once but the S&P 500 move right back into the channel.
11 Nov 2011 S&P 500 3-Month Technical Chart
Secondly, two Expanding Triangles can be defined in this chart as well. The first Expanding Triangle is bounded by the green lines and the second Expanding Triangle is bounded by the red line at the top and the green line at the bottom. If we take a look at the Expanding Triangle that is bounded by the green line, there was breakout to the top and is represented by the pink vertical line. The top of the pink vertical line represents the target for this breakout which is at 1380. Right after the break out, the S&P moved higher but fell well short of the target with a sharp move down. The down move penetrated and moved above the green line. This happened again a few days later. It looks like the green line has turned from resistance to support.
The second Expanding Triangle has not seen a breakout yet.
There is also a Contracting Triangle pattern that has formed (bounded by blue lines). There are few possibilities for this Triangle. One possibility for the beginning of this Triangle can is 14 Oct 2011 which would mean that the Triangle has completed. The beginning could also be 20 Oct 2011 which indicates that the final wave e is in progress. Another possibility is that it began on 28 Oct 2011 which indicates that waves d and e of the Triangle are yet to complete.
Triangles are normally the last move in a corrective wave or it precedes the last wave of a correction. This means that this correction which started on 4 Oct 2011 is coming to an end soon. If this Triangle is the last move, then this means that we see the S&P 500 heading lower from here on. If this Triangle is preceding the last move, then the S&P could have one more leg up to go. In that case, the target would be 1345 region.
Let’s now take a look at the hourly chart to get more info to help us determine the most likely move.
11 Nov 2011 S&P 500 Elliott Wave Chart
The move up from 4 Oct 2011 has been choppy and with no confirmation of volume as volume was light. This move can be counted as double zig-zag and is labelled as Minuette (w-x-y) of Minute wave [b] which ended on 27 Oct 2011. The following move after this is clearly impulsive and is labelled as Subminuette i. Then a corrective Minuette (a-b-c) ensued followed by another impulsive down wave which I am labelling as Micro wave [1]. Take a look at the below chart and see the Subminuette i and Micro [1] (highlighted in blue box) which are clearly impulsive. It appears that Micro wave [2] just completed and the S&P is going to embark on Micro wave [3] (of Subminuette iii).
There are a few support lines converging at 1230 -1236 region (highlighted in yellow circle) which would be a strong support region. But the nature of wave 3 is fast and furious and I would not be surprised to see this support region gets broken. On the other hand, if it does get stopped here, S&P 500 will likely rally up and quite possibly break the top of the Triangle and proceed to the next target of 1345.
As I said earlier, a lot of things are happening on this chart and because of that, it is quite difficult to confidently predict which way the market is going to go next. The key now is the support region at 1230 -1236. If it breaks, S&P 500 likely to head lower and if it holds, 1345 is quite likely.
Another point to note is that the situation in Europe is getting sorted out (or at least appears to be). This could calm the markets at least temporarily and we could see some choppy move up just like what’s been happening since early Oct 2011.
Elliott Wave Analysis 