S&P 500 ~ Elliott Wave Count ~ 31 May 2011

The SPX has been in a downtrend channel for the whole month - until today.

After the long weekend the market gapped up today and rallied more than 1 %:

It's been quite difficult to label the waves the past few weeks but since we're outside the channel now I think the bullish count is underway and we should see a rally to 1370ish next. Short-term support levels are at 1335 and 1328-31 which should hold if we're indeed in a new uptrend.

S&P 500 ~ Update ~ 29 May 2011

We did get the rally from the lower back up to the upper channel line:

Both counts I mentioned on Wednesday are still possible.

If we break the channel to the upside then a rally back to the highs and most likely even higher to 1400+ should unfold. Should the market stay in the channel though another sell off to the lower channel line (~1300) should unfold. If 1300ish breaks 1260ish is the next important support.

GBP/USD ~ Update ~ 26 May 2011

Let's have a look at the cable:

In 2008 the GBP/USD declined from 2.10 to 1.35 losing about a third of its value within only one year. Since then it has recovered and is now trading at 1.63ish.

It's a bit difficult to define the long-term trend for the cable (down/sideways?) but there is a very strong resistance in the low 1.70's so as long as it holds I think the rally from 1.35ish is only a retracement of the big down move from 2.10ish.

There is a very nice wedge forming thus the medium-term trend is up as long as the lower trend line holds. We may see a rally into the big red resistance area next.
If the wedge breaks possible objectives are the 1.54-55 area and then 1.43-44ish.

We broke out of a downtrend channel yesterday thus the short-term trend is up. I think we could see a rally to 1.67 again (or even a bit higher to the upper wedge trendline (see medium-term chart)).

S&P 500 ~ Intraday Update 1 ~ 25 May 2011

The 1319 level didn't hold so the bearish count I mentioned last week is now an alternative we have to consider (orange labels):

As you can see we're still in the blue channel so I don't want to commit myself to the bearish or the bullish count. A break out of this channel should help to determine which count is underway so it'll be very interesting to see what happens in the next few days.

If we break down then I think a big expanded flat, which started in February, is underway (3-3-5) which should bottom somewhere in the 1260 area.

If we break higher then wave [iii] should be underway to 1400+.

EUR/CHF ~ Update ~ 24 May 2011

As well as the USD/CHF the EUR/CHF has been declining for quite a long time now.

Back in 2007 the EUR/CHF was trading above 1.68 and today we're around 1.24, that's a massive drop of more than 25 %.

Thus, I think there is no need to say that long-term the trend is down:

In 2007 and 2008 we got a first decline from 1.68 to around 1.5 where prices stabilized (because the SNB (Swiss National Bank) intervened) for about a year. Late 2009 the EUR/CHF broke out of a big triangle and then sold off again to the current price of way below 1.30.

Medium-term the trend is down(/sideways). It depends how you define medium-term. For about half a year now the EUR/CHF has been oscillating between 1.24 and 1.32 so we could argue that the trend is sideways. If you don't just look at the last six months though then the trend is clearly down.

Resistance is at the blue downtrendline and then at 1.32 and 1.38-39.

Short-term the trend is down as long as we stay in the channel. It appears though that we are about to complete five waves down. So based on Elliott Waves we could see a bounce here (may be to the medium-term downtrendline). But the overall trend is down so be careful ; )