Wednesday, May 5, 2010

S&P 500 ~ Elliott Wave Count 4 May 2010

Already before the market opened I suspected that the expected rally won't happen. In my pre-market post I mentioned that if the ES drops below 1183 (SPX 1186) this would be very bearish. Shortly after the market fell below that level the sell-off started and didn't stop until below 1170.

Bull: There are many ways to count this as a completed correction. Above you see one possibility, another one (thanks to AussieKen ;)) I posted yesterday during the day:

I'll prefer the bullish count(s) if we get a rally above 1186.

Bear: Yesterday's sell-off can be counted as wave [iii] with [iv] and [v] to come tomorrow. What the bears don't wanna see is a rally above 1186. In this case wave [iv] would overlap with wave [i] which is not allowed. This impulse will likely bottom around 1150.

If we make a new low I'll prefer the bearish count.

As you can see I don't prefer any count at the moment. There are just too many possibilities.

I know we didn't get a rally yesterday but the fractal still looks good if we don't compare each candle. The decline from 1220 had a length of 51 points. In 2007 the "same" decline (the one down into the red circle) measured 53 points.

If we drop further though then this very bearish fractal may be playing out: