S&P 500 ~ Elliott Wave Outlook on February 2011

Review of January:

I didn't write a separate post on January but instead I posted an outlook on 2011 in which I included the January outlook. I expected the market to hit the 1290 to 1300 area sometime in January to form an intermediate term top there. So far, it looks promising but I'm still missing a confirmation that the top is in.

Outlook on February:

We got a big down day on Friday but so far no real damage has been done to the bulls. I'd like to see a decline below 1271 and 1260ish first before removing the tentative wave (1) labeling.

The bears get big support from the April 2010 fractal which has been spot on the last few days:

If the correlation continues we should see another up day tomorrow to form the right shoulder and then the market should go downhill from there. Should the fractal play out the target for f6 is 1189.31 (and 1148.92 for f10) which coincidentally is right in my preferred target range for wave (2) (1200 +/- 25).

As mentioned in earlier posts my preferred target range for wave (2) is 1200 +/- 25. In this area there is:

- the weekly MA 76 (in a few weeks time) which provided support during the 03-07 bull market
- the weekly MA 200
- the 38 % retracement
- 1189 (fractal f6 target, see above)
- 1210 (2009 fractal target, see this post)
- the April and November 2010 top
- the wave 4 of (1) territory

I also tried to define a time target for wave (2). In 2009 the correction following the big rally retraced about 28 %. Applied to today a 28 % time correction is in late March. Applying the April fractal to today points also to a low in late March. So late March looks like a potential time target for wave (2).


To sum up, it looks like the market will correct in February. I need a confirmation first though, i.e. a decline below 1271/60. Once these levels are broken we should see 1200ish in a few weeks time.

S&P 500 ~ Intraday Update 1 ~ 31 January 2011

I'm going to post the outlook on February after the close today, so just a very short update for now:

I still like to see a drop below 1260ish to get a confirmation that wave (1) has topped but it looks like the rally has indeed peaked.

The April fractal still looks very good. If the correlation continues the market should rally today and tomorrow possibly as high as 1290-1295. After that the SPX should sell off down to 1200ish.

I'll have more charts and price and time targets for wave (2) after the close today.

S&P 500 ~ Intraday Update 2 ~ 28 January 2011

Wow!

We already hit SPX 1280ish!

If we don't stop here we may even see SPX 1271 today (which matches the fractal target for today if you have a look at the chart in my last post)

S&P 500 ~ Intraday Update 1 ~ 28 January 2011

The market is selling off and we left the ES channel to the downside:

So, a test of ES 1278ish/SPX 1280ish look likely now.


Update on the April 2010 analogy:

It still looks very good. The market should sell off to ~1270 now and then rally next week without surpassing today's high (above 1303 this fractal is invalid)

ES ~ Pre-GDP Update ~ 28 January 2011

GDP in three minutes.

The ES has been trading in a tight channel the past three days. Let's see which way it breaks:

S&P 500 ~ Intraday Update 1 ~ 27 January 2011

The SPX hit 1300 just a few minutes ago!

This rally since July 10 equals the March 09 rally now. Back in March 09 we got a 289.44 point rally. This rally measures 289.82 so far.. Back then a 90 point correction followed: 1300-90 = 1210 = potential target for wave (2).

(Next upside target is 1313, above that I think wave 5 is extending and may reach 1350ish.)



Update on the April 2010 analogy:

Yesterday's candle matched the April candle. If this correlation continues then we should see THE top today, let's see if it happens, we'll know it tomorrow.. : )

S&P 500 ~ Intraday Update 1 ~ 26 January 2011

Put your Dow 12000 hats on and keep your SPX 1300 hats ready : )

Didn't think that we'll see a channel break out before the FED nonsense to be honest.


But we got a nice gap up and a channel retest this morning:

So, what now? Another spike higher after the meeting or a sell-off?
I don't know.. let's see what happens ; )

S&P 500 ~ Update ~ 25 January 2011

Just in case you missed the last trading hour: the SPX closed green today lol.

The SPX has been trading in a narrow range the past three days. If the channel breaks upwards I think we'll see 1300 if downwards a return to 1270 is likely:

Tomorrow the FED has some stuff to say so I guess the market will stay between 1280 and 1290 until then.


Some were pointing out that the current topping process is very similar to the April 2010 one:

Well, I agree, the candles look very similar, and if the correlation continues we should see a slightly higher high tomorrow (1300?).

S&P 500 ~ Elliott Wave Count ~ 24 January 2011

The SPX closed higher today failed to break the resistance at 1291 though, so, the market keeps everyone guessing whether the top is in or not.

Over the past three days some triangle-ish pattern was forming, thus a break above 1291 will very likely lead to new highs, possible objectives are 1300 and 1313.

I don't expect prices to go higher than 1313 though. As mentioned last weekend, tops are usually a process which take one to two weeks to form and so far it looks pretty good.


While the SPX can't really decide whether up or down the other two indices took position:

The Nasdaq is well off its rally high and hasn't even retraced half of the down move yet:

It looks like a flat is forming, so, if the 2725ish area holds the target for the next move is 2645ish.


The Dow on the other hand is making new highs every new day. It isn't even showing any sign of weakness. And by the way, the last time it closed lower one third of a percent or more was back in November 2010!

So, the Nasdaq is saying down, the Dow is saying up, one is lying... which one? We'll hopefully find out soon ; )

S&P 500 ~ Elliott Wave Count ~ 21 January 2011

The SPX gapped up back into the channel and hit 1291 shortly after the open retracing about 80 % of the down move. An attempt to fill the gap followed which was stopped at yesterday's high around midday. Since then the market had been moving sideways and closed three handles higher at 1283. So the decision whether the top is in or not is postponed until next week.

The ES displays the waves nicer than the SPX imo, so for once I labeled the E-Mini:

There appears to be a five wave move down followed by three waves up, so, as long as 1288 holds another move lower is likely. The first down move was 29 points so 1288 - 29 = 1259 should be the next target which also matches my important support area at SPX 1260ish.


Have a nice weekend!

S&P 500 ~ Intraday Update 1 ~ 20 January 2011

50 % retracement and backtest of broken support line?

S&P 500 ~ Pre-Market Warm-Up ~ 20 January 2011

The SPX hit the 1278ish target area yesterday. We may get a bounce here since we're also at the lower support line:

Should the market decline further though the next stop is the 1260 area and the uptrend likely finished. Below 1260 wave (2) to 1200ish is underway.

S&P 500 ~ Intraday Update 1 ~ 19 January 2011

The short term support line just broke:

We may test the 1278ish area now.

As said in my last post, I think the top will be a process which should take around five trading days. So, sideways around 1290 +/-10 all week long is likely imo.

S&P 500 ~ Elliott Wave Weekend Update ~ 17 January 2011

Mission accomplished!

The SPX hit my target (1292) on Friday.

After being bullish since December 1st when the SPX rallied above 1200 I'm now flat again ready to buy some shorts if and only if we get some weakness i.e. a decline below the 1278ish and the 1260ish area.

So far no damage has been done to the uptrend though, so it remains intact. If you have a look at the rally since December you can see that we always got the same pattern: rally to new highs - sideways/correction retesting the last high - rally to new highs. So even if we're not near a top we should still see a retest of the 1278ish area. Should this level break though it may be a first sign that an intermediate top is in. Once the SPX declines below 1260ish wave (2) is underway imo.


Before we decline below the mentioned levels I expect some sideways movement for about a week. The last few tops showed all the same pattern: rally - sideways for about one week - sell off:

So, should the market be near a top we may go sideways all week long between ~ 1290 and ~ 1300.


A common second wave retracement is about 50-62 % of wave 1. I don't think we'll retrace that much though.

The March 09 rally (wave (1)) measured 289 points and the following second wave (wave (2)) retraced 30 % in price and 28 % in time.

Today, wave (1) measures 282 points so far (289 at 1300), the 30 % retracement is at 1210ish and the 28 % retracement in mid March. The 1210 target is right in my preferred target area for wave (2) (see this post):

1200 +/- 20 points:

- weekly MA 76 & 200
- 30 % retracement
- wave 4 territory
- 23 & 38 % retracement
- April 2010 top

So let's see if it's even possible to get a correction bigger than 1 %. ; )

Have a very nice week!

S&P 500 ~ Intraday Update 1 ~ 14 January 2011

Another new high today - the SPX hit 1288 a few minutes ago:

This may be the last up wave within this Intermediate wave (1). Wave (v) (of [v] of 5 of (1)) should peak in the 1290-1300 area (1292 being my preferred target).

After this, a bigger correction should occur (Intermediate (2)), 1200ish being my preferred target.


However, only because we've managed to get to 1292 doesn't necessarily mean that the SPX has to go down from there. So, waiting for weakness before shorting may be a wise decision ; )


A first sign that wave (1) may have peaked is if we decline below 1280. I'm very confident that wave (2) is underway if the SPX drops below 1262.

S&P 500 ~ Elliott Wave Count ~ 12 January 2011

The SPX rallied almost one percent today hitting a new rally high at 1287. The market is now just a few handles shy of my preferred target (1292) so let's have a look what may happen next.

I expect this fifth wave to end between 1292 and 1313. This should complete Intermediate wave (1).

After that, Intermediate wave (2) should follow. My preferred target is at 1200 +/- a few handles. In this area is the 38 % retracement level of wave (1), the weekly MA 200 and MA 76 (well... in a few weeks time) and it's the territory of wave 4. It may take up to three months to get there (no specific time target yet).

I'm confident that wave (2) is underway once 1261 is breached.

I'd like to stress that the uptrend is still intact, so shorts are still countertrend! Wave [v] may extend and rally even above 1313. Thus, I'm not bearish now, just cautiously bullish ; )


Let's compare waves 3 and 5 once again:

Last time we compared them we were in late October 2010. Today, I think, was November 4th 2010, so according to this comparison the top is very near, probably only about one week away.

S&P 500 ~ Intraday Update 1 ~ 12 January 2011

The H&S strikes again! : )

Possible objectives at 1292-94, then 1300 and 1313.

The uptrend is now in danger below 1269 and 1262.

S&P 500 ~ Pre-Market Warm-Up 12 January 2011

The ES just hit 1280 that equals SPX 1284 so it looks like we're on our way to SPX 1300 ; )

S&P 500 ~ Elliott Wave Count 11 January 2011

The SPX tested the highs again today but failed to break it, so the market is still trading in the tight trading range between 1262 and 1278.

Above 1278 we should see 1290 to 1300 (inverse H&S target and wave 1 = 5 at 1292) and below 1262 the uptrend is in serious danger:

S&P 500 ~ Intraday Update 1 ~ 11 January 2011

Again?

The last two inverse H&S in December worked... three in a row? : )

Once above 1278 the inverse H&S target is 1292ish.

S&P 500 ~ Pre-Market Warm-Up 11 January 2011

Currently, the ES is trading at 1272, so only about 2 handles below the SPX high. (SPX 1278 = ~ ES 1274)

So, it looks like the market is heading to 1300 now.

There is a pretty nice fractal in the ES which supports a rally today:

All in all, I think we could leave the tight trading range (1262-78) today. The uptrend is in danger below 1262 now.

Dow Jones ~ Intraday Update 2 ~ 10 January 2011

There is a pretty nice channel in the Dow. Once outside, the rally should resume imo:

S&P 500 ~ Intraday Update 1 ~ 10 January 2011

Good Morning! : )

The SPX opened lower near Friday's low.

I mentioned the similarity of Jan 4th and Jan 7th. On Jan 5th the SPX gapped down and then rallied for the rest of the day. Today we gapped down again, so we may very well rally from here (that would also match my EW count):

S&P 500 ~ Elliott Wave Count ~ 7 January 2011

Instead of a new update I could just post the Tuesday update again lol!

But let's do a new update for today ; )


The employment change was actually a non-event. The SPX opened within the tight 4 handle range we stayed in all day yesterday. At 11 am it finally decided to move again and sold off to the 1263ish support area. From there the market rallied into the close to finish the day almost flat.

Yesterday, I mentioned a second, slightly different count. Since the market revisited the 1263 area, the alternative count is now my primary count (see above). But as I said, nothing really changes: 1290-1300 should be seen later this month.

The uptrend is in danger below today's low and likely completed if the SPX closes below 1254ish.


I'd like to repost a chart of wave 3:

Chart posted November 11th: wave 3

Chart posted January 5th: wave 3 & 5 similarity

You can see that now not only the shape of waves 3 and 5 look alike but also the counts do. So we may see a last big rally (3-5 %) next week ( = early November 10) to complete Intermediate wave (1).


Have a great weekend!

S&P 500 ~ Elliott Wave Count ~ 6 January 2011

What a waste of time!




So, it's all about how the market reacts on the employment change tomorrow: If it rallies above 1278 1290 to 1300 is very likely imo, and if it sells off it should find support at 1265ish and then rally to 1300:

The uptrend remains intact as long as the channel holds and the market doesn't close below 1253.

S&P 500 ~ Elliott Wave Count ~ 5 January 2011

The SPX hit another new rally high today: 1278!

Today, wave 5 equals wave 1 in time and almost in price (1292). However, the uptrend is still intact so shorts are still countertrend.

Short term the count I posted yesterday looks pretty good:

So, wave iii to 1290 to 1300 is underway now.

Should the SPX decline towards 1263ish again my alternative count I mentioned yesterday may be underway. But as I said, both counts lead to 1300. ; )

A first sign that the uptrend is finished is a channel breakout and a close below 1253.


Have a look at waves 3 and 5 and compare them:

They are so similar, aren't they? May be you remember that I mentioned this similarity like every day in the first two weeks in December lol but wow it's still working!

We're now in the 'channel rally' (like October 2010), possibly already near the end. If the similarity continues the rally may end with a last blast higher to 1300ish (like early November).

S&P 500 ~ Elliott Wave Count 4 January 2011

Yin and Yang today in the stock market...

The first 195 minutes were down, the second 195 minutes were up and the market, guess what, closed virtually unchanged.


For now, the count I posted intraday looks quite good imo:

So, above 1276 I think we should see 1290-1300 to complete this wave which started six months ago.

There is a slightly different count I also like which takes effect if the SPX declines below today's low. There isn't a big difference though, so in both cases I think we'll rally up to 1290-1300.

Important support is still at 1254 and 1247. Below 1233 wave (2) is underway.

S&P 500 ~ Intraday Update 1 ~ 4 July 2011

The pullback continued today. The SPX found support at the 2010 high (Dec 29th.. : )) and the 62 % retracement:

Hard to tell whether wave (v) is extending (i.e. today's low = ii of (v)) or yesterday was the top.

If you have a look at the ES it looks more like an a-b-c since yesterday's high, so wave (v) is probably extending and 1290-1300 is coming.

Important support remains at 1254.

S&P 500 ~ Elliott Wave Count ~ 3 January 2011

New rally high today! SPX 1276!

You may remember the following chart:

Chart posted on December 1st (Price and Time target for wave 5)

Time target for wave 5 is Jan 5th and price target 1292 (wave 1 = 5) - Jan 3rd today and 1276 - two more days, another 16 handles - let's see if we get it : )

The uptrend is now in danger below 1254. Below 1233 wave (2) is underway.

3 January 2011

First trading day of the year and futures are way higher than last year. ; )


Again I'd like to thank all the readers. Thanks for all the comments, the emails and the donations. Thank you : )

If you have any questions/suggestions/etc. just write a comment in the comment section below or write an email at: admin at wavaholic dot com

I wish you a successful and happy 2011!


I've posted quite a few updates since Xmas and if you enjoyed holiday season with your family you may have missed them and may like to read them now:

Q1 & Q2 2010 - Recap
Q3 & Q4 2010 - Recap

Two reviews of 2010 but may be a little bit different than elsewhere ; )

US Dollar Long Term Update
Gold Long Term Update
Silver Long Term Update
SPX Outlook on 2011

Well, the title pretty much says what to expect here ; )


Edit: Short term this count looks good: http://www.wavaholic.com/2010/12/s-500-intraday-update-1-30-december.html

Friday low = wave (iv)

wave (v) now underway (~1290)

S&P 500 ~ Outlook on 2011

Long term I haven't changed my count. I still think we are in a big expanding triangle, similar to the one occured 40 years ago:

If the market agrees with my count we should see much higher prices this year. After the recent rally, which took the SPX from 1040 up to 1260 within just four months, I think a correction is overdue.

A second wave usually retraces 50-62 % of the first one, thus depending on where wave (1) ends this gives us a target in the mid 11xx's for wave (2). My preferred target is the weekly MA 76 though. As you can see below the weekly MA 76 provided support during the 03-07 bull market and also recently in the current one:

After wave (2) is completed there should be a big rally up to 1500 or so (wave (3)). A fourth wave should retrace a part of wave (3) in fall 2011, followed by wave (5) to complete cycle wave d early 2012 around 1600.

At 1565 wave [C] equals wave [A], I think if we get that high though, then we should make a new all time high. So, the target for d is in the high 1500's/low 1600's.

My time target is based on quite a complicated calculation I did last April lol. So if you don't like math you may wanna skip this part and just look at the pretty interesting results...

[math]

In a triangle there is usually some relationship between the up and down subwaves (i.e. a - c - e and b - d)

So based on this I did some calculations:

[/math]

To sum up, the average time target for wave d is 12 February 2012 and for wave e it's 21 December 2012 (conspiracy!!! .. : ))


This is obviously just one out of the zillions of long term counts out there. There are counts which expect the start of a new bear market in a few days and others who think a new bull market is underway (So my count is actually right in the middle of the two extremes, well, probably because I'm Swiss lol).
I think all counts are possible and we just have to adapt as the year unfolds. As for my count, I'm very confident as long as the weekly MA 76 holds. Below it the next level is 1130 and if the market drops below it I think something else is underway.


I wish you a succesful 2011!!

Silver Update ~ 2 January 2011

My last updates on Silver were posted last April (long term) and May (medium term), so I think it's time to look at the white metal again. Back then I expected a third wave up to take silver prices much higher. It didn't happen until late August though when silver really took off. A massive silver rally from 18$ to 31$ an ounce within just four months followed, and it's probably not even finished yet since silver usually rallies until mid February:

I you have a look at the chart you can see that the seasonality of silver is similar to the one of gold. They both peak mid February, correct till summer and then rally again. This has worked almost every year since 2003 so 2011 may unfold similar.


When I posted the long term count last year I wasn't really happy with it to be honest. I tried to adapt it to my gold count, so I counted the crash in 08 as Primary wave [4]. But if you look at the chart wave [4] compared to waves [1] and [2] doesn't look very good, does it? Thus, I changed my long term count as follows:

I think it's much nicer this way. The recent rally is just too big to be a fifth wave imo, so cycle wave III underway fits better.

Cycle wave I was 17.43 $, so if III = 1.62*I then the target for wave III were 36.6 $.

If we look at a long term chart we usually take the logarithmic scale so I think it's wrong to take the arithmetic fibonaccis to calculate a target for wave III. I think it's better to take the 'percentage' or 'logarithmic fibonaccis'. I don't know if they exist but if they didn't they do now lol. I'd like to explain it in a dow chart:

(if you don't like math, skip this part... : ))

Wave I was about 150 points, III ~900 and V 11000. So, the normal fibonaccis weren't really useful.

If we have a look at the percentage gains of the three waves though we'll get a nice fibonacci relationship:

I : + 382 %
III : + 980 % ; about 2.61*wave I
V : + 1961 %; about 2*wave III

and the same for the logarithmic fibos:

I : ln(155) = 5.04
III : ln(908.4) = 6.81; about 1.38*wave I
V : ln(11180.28) = 9.32; about 1.38*wave I

(ok read again if you've skipped the math part.. : ))

So, the targets based on these new fibos are:

67.48$ (%) and 110$ an ounce (ln(x)) (with a 1.62 multiplier)


This target is ridiculous!!


Perhaps yes, but if gold rallies, then silver may rally even more:

Silver is about 17 times more abundant than gold in the earth's crust. Over the centuries the gold silver ratio was around 15 (so near the natural 17:1 ratio). Recently (since 1900), the ratio was trading between 17 and 100 though, currently it's at 46. So if the ratio went back to 17 silver should be priced at 90$ an ounce...

If you're interested in this topic you can read the following article: http://seekingalpha.com/article/206897-the-historical-gold-silver-ratio-and-why-it-s-time-to-buy-silver

(source) 

So let's see if I am too bullish on silver and gold and if it was wise to change my counts. I think it was (else I wouldn't have changed it lol), but only time will tell.