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 ; )

S&P 500 ~ Intraday Update ~ 23 May 2011

The market is quite tricky at the moment - one day it's up huge and then the other day down again.

The SPX/ES keeps making lower lows and lower highs so short term the trend is still down:

We're at the lower end of the channel so we may get a bounce here.

Support areas are at 1313ish (gap), 1300ish and then 1260ish.

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

The SPX rallied from 1319 to 1347 and is now pulling back.

It'll be interesting to see if the market just gives back its gains like on May 11th and 13th or if this time we can form a higher low and then rally from there to much higher levels.

If the rally from 1319 to 1347 was the start of a new big move up then this correction should bottom somewhere around 1333 +/- a few handles.

From there we should start moving up again and then break the blue downtrend line and eventually make a new yearly high.

S&P 500 ~ Elliott Wave Count ~ 18 May 2011

The rally which started on Tuesday continued on Wednesday and we almost hit the 1343 level I mentioned in my previous update.

Even though we haven't breached 1343 so far the move from 1370 to 1319 appears to be a zigzag. The only bearish count I can see is that a very bearish 1-2-1-2 count is underway but that's very unlikely in my opinion.

USD/CHF ~ Update ~ 18 May 2011

It's been a looong time since I've posted an update on a currency pair aside from the EUR/USD.

I plan to do updates on the most important pairs more often now (i. e. once a week or so (like my EUR/USD updates).


So let's start with the USD/CHF:

Long-term the trend is still down. There is a very strong resistance around 1.00 and then at the downtrend line around 1.13. As long as these levels hold I'm bearish on the USD/CHF.

Medium-term the trend is down. Despite the 400 pip rally since early May the trend hasn't changed. If you have a look at the chart above you can clearly see the stair step decline. Each downleg was followed by a rally which tested the previous low thus we can expect the current rally to peak around the 0.9ish level which should be followed by another sell-off to new lows. If we break above 0.9ish the next level is around 0.93-94. A break above this level should lead to a rally to the long-term resistance around 1.00.

Short-term the trend is sideways. The break out of the downtrend channel was bullish and lead to a rally to the resistance around 0.90. Since we've almost reached this target though I'm not bullish anymore.
As you can see in the chart there is a nice little H&S with a neckline at 0.88. If it breaks the short-term trend is down with targets at 0.87 and 0.8550.

S&P 500 ~ Update ~ 17 May 2011

The SPX sold off down to 1319 by noon and then started to rally to finish the day unchanged at 1329:

On a daily basis the 1330ish support is still holding so there is still a chance to see prices above 1400.

I'd like to repeat what I said yesterday: As long as we stay below 1343 we could see 1300 or even 1260. A rally above 1343 would invalidate most bearish counts though and thus lead to a rally to new highs.

S&P 500 ~ Update ~ 16 May 2011

The 1330ish is still holding. It looks like it'll break anytime soon though.

As long as the SPX stays below 1343 there is a good chance to see 1300 or even 1260 again in my opinion. Should the market break above 1343 though then a rally to new highs should unfold.

Let's see what happens today.

S&P 500 ~ Elliott Wave Count ~ 15 May 2011

You may have heard that blogger had some serious problems. Thus, I couldn't post an update on Friday (and the update from Thursday got deleted).

Anyway. Blogger is now working again and thus it's time to have a look at the SPX again.

The market closed about there where it closed one week ago - around 1340. We've seen huge swings within the week though and rallied as high as 1359 and sold off as low as 1332.

The 1330-1340 support area proves to be very important. We've spent the last two weeks in this area and it feels a bit like in November 2010 or March 2011:

In November 2010 the market test the 1175 area like a zillion times and then rallied about 100 handles within one month.

In March 2011 the market tested the 1305 area a few times but eventually broke it and then plunged 50 handles within a week.

Today it looks like 1330 is the important level and that a huge move, down or up, is likely to follow. If we break lower I think we could see 1260ish again, if we break higher 1410-40 is likely.

As long as 1330ish holds on a daily basis the count looks good i. e. a third wave to 1415ish should follow in May/June. Should 1330ish break though then my count is most likely wrong and we could see 1260ish again.


So let's see if the market decides to break up or down this week ; )

S&P 500 ~ Elliott Wave Count ~ 11 May 2011

The SPX gave back all gains from the previous two trading days and tested the important support area at 1330-40 once again:

So far the support is holding and as long as it does (on a daily basis) I think we could still see prices above 1400 in May/June.

Should prices decline below 1330 though then the next target should be the 1323-24ish area. If this level doesn't hold either then my count is most likely wrong and we could see a correction down to 1260ish again.

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

The uptrend line is broken:

So after all it looks like the (b) wave count was the right one. A potential target for wave (c) is a double bottom around 1330 or a lower low at around 1320. If we go lower than that my count is most likely wrong.

Silver ~ Update ~ 10 May 2011

There's not much going on in the markets, actually there's nothing going on right now..., so let's have a look at silver again:

As said last week the uptrend line may be good area for at least a short term rally in silver. Currently we're just below 39 $ thus already up about 6 $ from the lows. I think this rally could last a bit longer and reach the 42ish or even the 45ish area. Once above 45ish 50 $ should be next which I don't think will happen though. I think there'll be one more sell off in June or so before the next rally to 50 $+ starts.

S&P 500 ~ Elliott Wave Count ~ 9 May 2011

I think nobody would have complained if the market had opened only between 11.45 and 12.15 yesterday... ; )

As already posted last week the downtrend line was broken on Friday and then successfully retested the very same day:

If we get a convincing break of the 1354-57 area the odds are very high that we'll see a new high in my opinion. Above 1357 the next levels are 1370, the low 138x's and then 1400.


As you can see in the ES chart below we also got a break and retest of the downtrend line:

As long as the uptrend line, which is now in the low 134x's, holds we should go higher. A break of 1352-55 should lead to a rally to 1373.

EUR/USD ~ Update ~ 9 May 2011

(Read my last EUR/USD update here)

After the break of the 1.43 area earlier this year I expected the EUR/USD to rally to 1.50-51.

Last week the EUR/USD almost hit this target and has sold off since then back to the break out area of 1.43ish which I think is now strong support (1.41-43ish):

Despite the big correction of almost seven cents I don't think that this is a new medium/long term downtrend. As aforementioned 1.41-43 should be strong support and unless we get a convincing break of this area I still think we could see one more rally to 1.50-51.

Should we get a break of the support though then we may go down to 1.35ish or even 1.30 but I'll post a new update if it happens.

S&P 500 ~ Intraday Update 1 ~ 6 May 2011

The ES hasn't breached 1355 yet (SPX 1357) so the bears are still in control.

We've got quite a big sell off in the past two hours which can either be seen as a backtest of the broken downtrendline or the beginning of wave (c) down.

As said earlier today's rally could only be a (b) wave i. e. a (c) wave to 1330 or even a bit lower would follow next week. Another possibility is that today's rally is a first wave of wave [iii] up and the most recent sell off a second wave.

If we rally above today's high I think wave [ii] is over and wave [iii] underway. This scenario is confirmed if we break SPX 1370.

Should the SPX get back into the downtrend channel we broke out earlier today then I think wave (c) is more likely.

ES ~ Pre-Market Warm-Up ~ 6 May 2011

Today is the 1-year anniversary of the flash crash:




Pre-Market it looks like this year we'll see more of a flash rally than a crash:

The downtrendline was breached after the release of the employment numbers and a few minutes ago we hit the 50 % retracement of the most recent downmove. As written yesterday this rally could only be a (b) wave i.e. another sell off 1330ish should follow next week.
Should we rally above ES 1355 though then I think wave [ii] is over and wave [iii] is underway.

EUR/USD, Gold, Silver ~ Update ~ 5 May 2011

The EUR/USD declined almost three cents today and is now just above the support at 1.45:

If you have a look at the last four months you can see that we always got the same pattern over and over again: rally to a new high - retest of the old high - rally to a  new high - retest of the old high - ... -

And as long as this continues, i. e. the support at 1.45 holds, I expect the rally to continue. The next target should be around 1.51.


Gold (along with silver and oil) declined quite a lot this week. So far the uptrend is still intact though. The uptrendline is around 1400:

Silver declined 15$ or 30 % this week alone! So, I was right about a correction at the 50$ level but totally wrong last weekend when I thought we could see another rally to new all time highs before we'd get a real correction.

We may get a bounce around these levels (blue line). Most likely it'll be only short-lived and another sell-off may follow down to around 30ish by June/July (A-B-C correction).

ES ~ Intraday Update 2 ~ 5 May 2011

The downtrendline in the ES:

Not broken so far.

S&P 500 ~ Intraday Update 1 ~ 5 May 2011

The SPX hit the support area at 1330-40 again this morning and we've seen a rally to 1348 since then.

As you can see in the chart the downtrendline is about to break to the upside thus it's possible that wave [ii] is completed and wave [iii] is underway now:

A break above 1370ish confirms that wave [iii] to 1410-20 is underway.


I'll have more on the EUR/USD, Gold and Silver later.

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

I'm back a bit earlier than I thought so from today on there will be daily updates again. ; )

Just had a look at what has happened this week so far and it appears as wave [i] peaked at 1371 on Monday and we're currently in wave [ii]. I'm not sure whether it's already completed at 1342 or if it's only wave (a) of [ii], i.e. that wave (c) is going to test the support area between 1330 and 1340 once again next week (similar to what happened mid April (1302 and 1294)).

Whichever short term count is correct in my opinion the support area around 1330-1340 should hold to see more upside (to 1400+) later this month. If we break below this area I might be wrong and something else is underway. A convincing break above 1371 confirms that wave [iii] to ~1410 is underway.

S&P 500 ~ Elliott Wave Outlook on May 2011

Last week in the army for me thus I'll be able to post every day again from May 6th on. ; )
I posted a EUR/USD, DXY, Gold and Silver update a few hours ago: http://www.wavaholic.com/2011/05/eurusd-dxy-gold-silver-update-1-may.html



Review of April
April unfolded almost as expected:

"It looks like we need one more rally to complete wave 1. After that a wave 2 should follow down into the 1300 area. "

Wave 1 peaked at 1339 early April and wave 2 unfolded in a simple zigzag and ended at 1295 mid month. Since then we've seen a huge rally and the SPX finished the month at 1364 (up about 3 %).




Outlook on May
I generally expect more of the same as in late April and wouldn't be surprised to see a 14xx at the end of May.

Last year the SPX topped in mid January, corrected into early February, formed an inverse H&S and then rallied for two and a half months till April.

This year the SPX topped in mid February, corrected into mid March, formed an inverse H&S and has rallied since then. If this rally also lasts two and half months we should see some sort of a top (wave (3)?) in June.

Last year the SPX topped when QE1 ended (April 2010). QE2 ends in June 2011 so I think you can see the similarities here.

As posted a few times already my target for wave 3 is around 1430ish which should be followed by a sideways wave 4 and a fifth wave up to around 1470ish to complete wave (3).

Short term I'm not sure whether this is still a part of wave [i] of 3 or already [iii] of 3. Whichever count is underway though the 1330 area should hold. If we get a convincing break of this level then I'm probably wrong.

To sum up, as long as 1330ish holds I expect to see new rally highs in May most likely even a rally to above 1400.

I wish you a very successful month! ; )

EUR/USD, DXY, Gold & Silver ~ Update ~ 1 May 2011

EUR/USD
(read my last EUR/USD update here)


The 1.45ish support held and we've seen another big rally in the EUR/USD this week. We're now only about 1 cent below my target area of 1.50-51ish which I've been mentioning for a few weeks now after 1.43ish was broken:

Short term support is at 1.45ish. If we hit the 1.50-51 area we could see a bigger correction into the low 1.4x area (wait for some kind of reversal first though! or at least use stops). Should we get a convincing break above 1.51ish a rally to 1.60ish is very likely imo.


US Dollar Index
The last time I posted a DXY chart was in late February when the index was still in the multi-year triangle. Just a few days later the USD broke the support line and since then has sold off and is approaching its all time low:

The next support area is the 71ish area, if we break that we may go way lower (66/67 or even lower). Should we get a bounce from the 71ish level then I think we'll retest the broken trendline in the high 7x's before we'll go lower again.


Gold
Gold hit another new all time high this week and as long as the uptrendline isn't breached the rally should continue:

Silver
As written last week if there ever is a correction in silver then it may happen around the all time high at 50$. On Monday silver almost hit 50$ and then sold off and fell below 45$ by Tuesday, a level not seen since April 20th! Since then it has recovered nicely and it looks like we could see a new all time high already next week.