S&P 500 Fibonacci Study

I made this chart by adding all the major moves and the corresponding Fibonacci retracement and extension levels. What I did was to plot the Fibonacci levels for each major move and then copy the same plot and move the Fibonacci levels to the point where the move corrected to. I did this for five major moves as labelled in the below chart.

S&P500 Fibonacci Chart

As I continued to add one after another each of these sets of values, a few regions of concentration started to appear. You can see clearly those regions in the chart.

I also noticed that there are major turning points in the price at some of these regions as highlighted in green, red and blue arrows. These regions are of value for future forecasting.

Please take a look at the red arrows. The price dipped twice in early 2008 near one such region and was turned back. Finally the price broke through, came back up to test it and crashed from there on. Well what do you know, we are at that very same level today. See the red arrow towards the right of the chart. This same region was tested twice in April and August 2011, finally it broke, there was a mini crash, and now it has come back up to that level once more. Is it going to turn down from here and crash or is it going to go further higher once this level is broken to the top side?

The below chart is the Daily chart of the same setup and here, we can see clearly that the current horizontal move (Triangle) is trapped between two regions of Fibonacci concentration. I believe that a move out of this region would result in a significant move.

S&P500 Fibonacci Daily Chart

At this juncture, I would like to say thanks to FreeStockCharts.com for providing this fantastic charting tool.

S&P 500 EOD Review 10 Nov 2011

In my previous review, I had mentioned a correction is expected to take place to correct the down move of 9th Nov with a target range of 1246 – 1257.  As expected, the S&P 500 was consolidating in the last session and had gone as high as 1246. There seems to be resistance at 1245 which held twice. Looking at the recent move, I believe that Micro wave [1] is still in progress with the consolidation take up Micron wave (4). Reason for this prediction is because consolidation move is looking like a triangle and triangles usually take place as waves 4, B or X. This triangle can would fit well as Micron wave (4).

With this, the next expected move would be the final wave E of the triangle followed by Micron wave (5). This is the Primary count. The final target for this move is 1040 region.

10 Nov 2011 S&P500 Elliott Wave Chart Primary Count

Alternate Count

There is an Alternate count developing which is a possibility of a triangle for Minor wave X. This count is gaining traction as the move from 28 Oct is not pushing down but moving sideways. If the triangle pans out, we could see the S&P 500 moving much higher. It could also indicate that Intermediate wave (C) is in progress which is very bullish.

I’ll be reviewing the medium term charts over the weekend. Do check back for that review.

10 Nov 2011 S&P500 Elliott Wave Chart Alternate Count

Asian Market Mid Week Review 10 Nov 2011

Singapore’s Straits Times Index and Hong Kong’s Hang Seng Index Mid Week Review

This review is for both the Singapore’s Straits Times Index as well as Hong Kong’s Hang Seng Index as both are moving in tandem and are closely coupled with the US Market.

I believe the S&P 500 sell down in the last session is just the beginning of further selling and it could go as low as 1040 from the current 1230 points. Please see the Review of S&P 500 for further details. Both the HSI as well as the STI are expected to follow as well. It is already evident from today’s sell down in this two indexes. Point to note though is that HSI stopped short of 19k which has been providing support and resistance recently. I had published a post titled Battle of 19k and take a look at that post for details of the importance of this level. If the HSI breaks this level to the down side, this could turn into a huge sell down and HSI could go as low as 15700 region. If the 19k holds, the up trend may continue for a while but not much longer. So the upside is very limited at current levels.

We are at a point where those who are bullish or are long term investors should remain cautious and probably reduce their holdings and be prepared to buy when the index is at a much lower level. Again I like to highlight that this is my view and not to be taken as investment advice and every investor should do their own analysis and make a decision based on their own risk profile.

I’ll be updating the 2-Year charts for these indexes when I get some time. Maybe over the weekend. So check back to get updated on that.