Hang Seng Index (HSI) 5-Year Primary Elliott Wave Chart

I have a few counts going on for the HSI. The most likely one, the Primary count is rather bearish. Let me present the chart from the highs of 31958 recorded on 2 Nov 2007. The HSI then lost a huge portion of that to close at 10676 on 31 Oct 2008. I believe that the move down from Nov 2007 is a 5 wave impulsive with a truncated fifth wave. That is Primary A.

The HSI then recovered to 24988 in a A-B-C pattern which is Primary B. Thereafter, the market turned down again albeit slowly at first and then getting fast and furious hitting a low of 16170. This is just the first part of Primary C.

I believe that the HSI is in Minor 4 of Intermediate (1). This Minor 4 is going to end soon and the HSI would likely embark on Minor 5 with a target of 15000.

HSI 5-Year Primary Elliott Wave Chart 6 Feb 2011

Note that the Weekly MACD is approaching zero line from negative zone. It is likely to either hit zero and then turn down which is quite bearish. But, since the next move is a fifth wave, the MACD is likely to form a divergence. That would give a good indicator and increase the confidence that I have for this count.

The HSI is also sitting right above the 200 D MA having pierced it. But this overshot is not likely to last.

Hang Seng Index (HSI) 5-Year Alternate 1 Elliott Wave Chart

The Alternate view is that this whole move since Nov 2007 is a sideways horizontal triangle. The MACD confirms this as it is oscillating about the zero line. Also, each leg is about 61.8% of the previous leg so far. If the HSI hits 21500, that would make wave D 61.8% of wave C and give further weight to the horizontal triangle scenario. This count is the bullish count as horizontal triangles are continuation patterns and usually it is the move prior to the last leg. This indicates that this whole move could be a wave four and a fifth wave is likely to follow after this triangle is over. This is very bullish as it means that a multi year bull run is in store and likely to take out the previous high of 31958.

HSI 5-Year Alternate (1) Elliott Wave Chart 6 Feb 2011

Hang Seng Index (HSI) 5-Year Alternate 2, 3 Elliott Wave Chart

I present the Alternate 2 and 3 which are quite remote for the time being. We’ll revisit this if it becomes evident of a higher chance.

HSI 5-Year Alternate (2) Elliott Wave Chart 6 Feb 2011

 

HSI 5-Year Alternate (3) Elliott Wave Chart 6 Feb 2011

 

S&P 500 EOD Review 26 Jan 2012

The S&P 500 corrected the impulsive move made on 25 Jan 2012. It retraced 78.6% of the move. The move up on 25 Jan is clearly an impulsive move. The correction in the last session looks like a 5-3-5 correction. This could indicate two things. The S&P 500 could head higher as impulsive move followed by corrective move will likely be followed by another impulsive move. Or, the move down in the last session is not complete yet, and further downside is possible.

The momentum is waning with every upwards surge as the MACD on the hourly is still negative. The MACD on the daily is getting flat as well. I am still expecting a correction to kick in soon.

S&P 500 EOD Elliott Wave Chart 26 Jan 2012

S&P 500 Fibonacci Confluence

The S&P 500 almost hit the next Fibonacci band at 1337 but retreated after hitting 1333.

S&P 500 Daily Fibonacci Chart 26 Jan 2012

S&P 500 Volume

The volume is still light but relatively higher on the way down. If the selling volume increases, we can expect the market to turn down.

S&P 500 Daily Volume Chart 26 Jan 2012

S&P 500 EOD Review 4 Jan 2012

The S&P 500 is looking toppish and a downwards correction is expected soon. The MACD on the hourly as well as daily is diverging and this is a clear sign of losing momentum. My take is that we are in the final stages of this move up.

The question is whether is this going to be a deep correction or a shallow correction. If the support red line at 1225 is broken, the market could head much lower. If the red line holds, we could see higher levels of 1400 or even 1500.

S&P 500 EOD Elliott Wave Chart 4 Jan 2012

S&P 500 Fibonacci Confluence

The S&P 500 touched the next big Fibonacci band at 1282 – 1293 and turned down. We can expect one more push up to touch this band again before sliding down.

S&P 500 Daily Fibonacci Chart 4 Jan 2012

S&P 500 Volume

The volume is very light and is typical of market turn points.

S&P 500 Daily Volume Chart 4 Jan 2012