|I'm starting with a weekly chart. A daily chart is used to find an entry/exit point, whereas a weekly/monthly chart defines an overall trend.|
|Figure 1: A last gasp for the S&P 500 index?|
|Graphic provided by: AdvancedGET.|
|The above weekly chart by Advanced GET, highlights my preferred Elliott Wave count. It suggests that the down move from 2000 completed a C-Wave in October 2002, and the subsequent trend is a 5-wave impulse pattern upwards. The chart also suggests that the S&P 500 index is completing a fourth wave and moving into wave five. The suggested target determined by the program is 1307.53. This is a 15% rise, which is reasonably substantial. The GET program also suggests there is an 85% probability this target can be reached, and that the index could go as high as 1448. With the PTI at 85%, this is very likely. |
Looking at the indicators, the RSI is moving down, suggesting weakness. This is confirmed by the support and resistance lines which suggest a rising wedge formation. Price tends to break downwards from a rising wedge. These two factors alone make the target prices of 1307 and 1488 suspect. Because of this uncertainty I have added the Make or Break (MOB) study of the program to the chart.
The MOB (Make or Break) study is a tool that can help you find the target price area for the end of an Elliott Wave 5, or for any pattern that has an impulse-correction-impulse pattern. The MOB target is only 1184, suggesting the 5th wave could be a flat. This seems to fit in with the rising wedge and falling RSI.
So. . . is this the start of a new bull market, or. . . is this a bull trap?
Figure 2: Monthly chart of the S&P 500.
The monthly chart is showing a very different scenario. Here, the S&P 500 index is in a rising B-wave, while the rise shown in the weekly chart is a five impulse wave in a major B-Wave upwards. B-Wave are notorious bull traps, and as the fifth wave shown in the weekly chart unfolds, many could be trapped in the rising bullish enthusiasm.
On September 30, 2003, I presented an article, "The S&P 500 And Its Lines," which will explain the Gann fans on the chart. I have added the major Fibonocci retracements to the chart, showing that the Index has retraced to the 50% level and could rise to the 61.8% level should it break above the resistance at 1162. With this in mind I have drawn (blue lines) a possible future scenario.
|Caution prevails, and the weekly chart is indicating the investing community dislikes the uncertainty prevalent in the world at the moment. Be careful out there.|
|Address:||3256 West 24th Ave|
|Phone # for sales:||6042634214|
Click here for more information about our publications!