Wednesday, June 3, 2009

S&P500 Elliott Wave Analysis, Bearish Outlook (Part-1)

The majority of investors think the March low was the bottom, I would say, "fool me once shame on you, fool me twice shame on me". Technically we are at the same position as we were last year at the exact time. You should remember CNBC lined up all the bulls that they could possibly find and they would come to TV and say "yeah this is the best time to buy, you missed boat you should jump before it gets too late..." and we know what happened in coming months.

In the last 2 days S&P500 is bouncing around the 200EMA. I talked about the importance of ~940 level in my previous post "The Significants Of 940 Level In S&P500".
We are due for pull back, we should of seen it by mid-May, but so far there is no sign of the pullback! I start to wondering if we are going to get the pull back ever!

As you see in the chart S&P500 has been moving in a channel since August 2007. It hit the channel 4 times, and it's getting close to hit it for the 5th times. If S&P500 moves to 950~960 and start to roll over to me that marks the start of the 5th sub-wave down. There is disagreement between technical analysts, some believe the March low was the end of the 5th sub-wave which marks the end to wave #1, but I think we are in 4th sub-wave up, and we didn't get the 5th sub-wave yet. If S&P500 moves above 960 it could shoot up to ~1000. If S&P gets above 1200 and stays above it for 2 weeks, it means I was dead wrong on my analysis and March low was the intermediate bottom. Please note if 880 support holds S&P500 could rally to 1200. It would be an ideal target for wave #2.

If S&P500 violates the 880 next major supports would be 740 then 666. If S&P500 break the 666 it should end up ~450. Note that ~450 is the 76.4% Fib-Retracement of the 28 years bull market.