Tuesday, 19 April 2016

S&P 500 at trend line resistance, bullish & bearish paths illustrated

S&P 500 is at trend line resistance. I've illustrated two Elliott Wave counts, one medium term bullish, one not. You might be thinking "so Avid, you're saying the market could go one way, or it could go the other way.... What help is that!?!". If nothing else, for me it is a reminder to never be too attached to a point of view, recognise the market can do anything next. Also, it says wait for a setup where there is less doubt and/or risk can be managed a lot more tightly. The S&P's rally is stretched here. Charts include all sessions trade.

Medium term bullish count sees wave 1 nearing an end, to be followed by wave 2 lower, then waves 3-4-5 to higher levels. To favour this count you must believe that the rally from the Feb lows is forming a clean 5 waves higher. It can be counted that way, certainly, but at daily chart level looks choppy and therefore possibly corrective, which favours the second count...

Second count favours that wave B is nearing a peak, and will be followed by wave C to below the February low.

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