Monday, November 29, 2010

S&P 500 ~ Elliott Wave Count 29 November 2010

This morning the markets were sharply lower. The monthly lows held though and the indices rebounded and closed lower only a few handles.

Today's sell off may have been just a retest of the upper channel line:

It's very possible that today's low will be labeled as the wave 4 low:
Wave 2 took about 14 days to unfold. - Today is the fourteenth days since the top. So a nice time relationship between the two corrective waves within this motive wave.

I wrote about two weeks ago how wave 4 should unfold:

"A fourth wave usually retraces 23 to 38 % of wave three and into the territory of subwave four of three. This results in a target range for wave 4 of 1156 to 1196. Wave 2 took about three weeks to unfold, so if we expect a similar duration for wave 4 this puts us to the end of November. Lastly, waves two and four usually alternate. Since wave 2 was a simple zigzag wave 4 should unfold in a flat or a triangle (or a combination thereof)."

So far, this looks pretty good, let's see if the PIIGS and North Korea allows the market to go higher... : )

If today was indeed the low of wave 4 we can try to define some possible price and time objectives for wave 5:

Wave 1 measures 120 points and lasted ~27 days. Wave 3 was about 1.62*wave 1 in price and 2*wave 1 in time. Wave 5 equals usually wave 1. So, this gives us a price target near 1300 and a time target early 2011 for wave 5 (and wave (1)):

As mentioned before I'd like to see a convincing break of SPX 1200 before turning bullish.