Almost two months of upside simply erased in a day - computer glitch or not!
Here's a daily chart of the S&P500, with a suggested count, and path projection. More importantly, both uptrendlines(grey & white) broke down, with no follow up effort to recapture. Price currently sitting just around the 200-day moving average, at oversold levels. A lot of short-term volatility is on the cards.
Elliott Wave Count
Primary count is corrective(bearish) up since Mar-09, with the alternate impulsive(bullish) count in [brackets]. If you recall, it was very hard to count the internals impulsively, during the entire uptrend. One of the reasons to consider the bullish case, is the extent of the retrace so far - 61.8%, surprising strength. Whichever the case, the medium-term view is bearish now.
Possible Head & Shoulders ?
A H&S top could be in the making, with LS at 1150, Head at 1220, and neckline at around 1060. Natural resistance around 1150 level might facilitate the RS. If it works out, we could be looking at 900 level in the medium-term. This is just one of many possible scenarios.
Asian Markets
Many asian markets are also breaking down from recent highs, will be posting an update on some of them next week. Shanghai has been in a extended sideways-to-downwards move for almost 9 months now, not quite following the SPX. Although long-term bearish, I believe SSEC is nearing the end of its correction & china bears will be disappointed (for a while). It will be the subject of the next post.
FREE Elliott Wave Theorist
EWI has just released the latest Elliott Wave Theorist (by Robert Prechter) for free. Click here or the banner above. You just need to have a club membership, which is free. I'd highly recommend reading it - a brilliant piece of research.
All the best!
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