S&P500: A-B-C or W-A-V-E 3?

Last post on the SPX talked about resistance levels. Price kissed the downtrendline shown, and reversed with some real sting on Friday. Short-term oversold, but no reversal signals from the usual momentum indicators - so probably more downside to come early next week. Question is, did we complete an A-B-C at 1010, or are we looking at a completed, nested 1-2, i-ii with serious downside(dreaded wave 3) ahead?

Prechter's View

Most of you are already familiar with Elliott Wave International(EWI)'s Robert Prechter, and his views. For those who have not had a chance, click here to download a time-limited, free copy of the Elliott Wave Theorist. They are looking at the latter view of serious downside. The report will give you a detailed picture.

Reasons to consider the A-B-C view:

1. Move up from Mar-09 was in 5-waves on the weekly chart (Although, note that the internal wave structure did not have impulsive qualities at all)
2. Unless we ignore the vertical part of the flash crash, the decline so far looks more corrective than impulsive.

Death Cross

The 50-day MA(red) crossing the 200-day MA(green) from above, is a bearish indicator also known as the Death Cross. This supports EWI's bearish picture, at least for the medium-term.

Resistance & Support

The upper trendline in red is crucial resistance for any further upside attempts. A sustained break above will change the picture to bullish. 1070 support did not hold on Friday, and unless it's regained quickly, all hopes of an upside breakout will be dashed.

Down below, we're looking at support just below 1040, followed by 1010. Further downside will see support around 950 initially.

Personally, i am leaning towards neutral-to-bearish, based on the price action. But gonna take a rain check on the US markets, and trade Asia for now.

All the best!