Tuesday, August 17, 2010

S&P 500 ~ Elliott Wave Count 17 August 2010

The SPX hit 1100 today, the 50 % retracement of wave (i) down. In my last update I thought the market would close the gap first and then rally to 1100 but instead of an attempt to fill the open gap we got some trianglish action in the morning and then rallied higher to reach 1100 early afternoon. A small sell-off followed late in the day and the SPX closed at 1092.54 (+1.22 %).

This market really likes 50 % retracements:

When the SPX was at 1080 yesterday I expected a three wave move to 1100-1106 to form wave (ii).

So far, we can count three waves from the 1069 low to the 1100 high, thus I think wave (ii) is over:

Wave (iii) should be confirmed if the SPX is back down at 1080 (and gets confirmed below 1070). The target for this wave is around 1000 ((iii)=(i)*1.62, H&S target, important psychological level).

I really prefer the downside here but since nobody can predict the future I got an alternative count just in case today's high gets breached:

I think if the market rallied above 1100 tomorrow we'd have a pretty nice five wave move from 1069. It could be wave a of (ii) but I'd tend to count it as a wave (i).