Has the S&P Topped?
Is this just the illusion of an ongoing rally?
Click here to enlarge.
The chart is an Elliot Wave stab on the same. The big drop to 822 that came in a 5-wave pattern is the key to this chart. That drop was the wave c of a larger degree flat corrective, marked as the yellow X, after completing the inner Y at that point.
From this drop of 822, this market has risen in 3 distinct legs, with the first 2 being choppy overlapping A and B waves marked in blue letters. The latest rise from the 841 area to a now clear 5-wave pattern, where today is the day for completion of the fifth of these, and of which 1,2 & 3 are definitely done.
One more high after the initial hour drop at most is where this market will go to before going and breaking all the way under the 780 area, which is where this highly under-bought rise began. The coming drop isn't marked to time scales, due to inadequate space on one screen for so much fine data. Such a sequence of no more than 2 down closes after any interim highs since the March 31 low does characterize a market that continued to rise in an under-bought state.
Tops don't happen because of selling, but because of buying exhaustion. Such an under-bought market, which rises with such an intricate inner structure of wave counts, can
continue to defer the final reversal, but today seems the deferral is not likely further without a drop into at least 862. That being the last low of the wave 5 of this latest C.
So, if this market does drop to 862 from the 2nd hour high of today, we will have to again work at finding the wave structure of this first fall. Until then, play well with this volatile rise.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter