Equities aren't WAVING white flag yet

February 10, 2014 04:52 AM

S&P500 Elliott Wave Analysis: Correction May Occur

A sharp impulsive reversal from the highs suggests that the S&P 500 has reached a temporary top and that price is heading lower or sideways in wave 4. Wave 4 is a corrective leg so this can be only a temporary weakness but we still need three legs in (a)-(b)-(c) formation, before we may start looking back to the highs again. Based on the latest price action we see a completed wave (a), followed by wave (b) that may find resistance next week around 1800-1820.

S&P500 Daily Elliott Wave Analysis


S&P 500 Four-hour

The S&P 500 reversed nicely from the lows, clearly in five waves from 1732 which suggests that decline from the highs is completed, either as a five wave move in wave (a) or a zigzag labeled as alternate count. In both cases we need a minimum three waves to the upside. We see now wave a) at resistance of a former wave four, so traders should be aware of a pullback in the next few sessions, ideally back to 1750-1762 zone before prices may continue up in wave c).

S&P500 4h Elliott Wave Analysis


S&P 500 One-hour

The EUR rallied, USD fell at the end of last week after the European Central Bank (ECB) press conference and worse than expected NFP figures. Meanwhile U.S. stocks and commodities rallied as bonds declined.

On S&P 500 futures chart we can count five waves up from the lows, which is an important structure for a bullish case. We are expecting minimum three waves up from the lows this week, but before an uptrend will resume we need a corrective wave b) move down to the 1750-1762 region where traders could be interested in long opportunities.

S&P500 1h Elliott Wave Analysis



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