The index fell to a low of 1040.7 on tuesday, followed by an up correction the rest of the week, announced by a hammer pattern in the candle chart. We are now close to the 61.8 Fibonacci retracement, reaching the resistance of the 200 days simple moving average.
We have completed a first impulse wave down, making up the first correction wave (A) down. We are now in the making of correction wave (B) up. I assume consisting of an ABC correction wave. After that we should have the correction wave (C) down
So I expect a further down move after a short term up correction. The SATS2 expert is still red. There is no open long position. Personally I would wait to enter a new manual short position until the end of the short term up correction.
The index finished the long term up move since the price bottom in March 2009 and has started the longer term correction wave. We expect a correction wave 2 of a higher degree, followed by a long term wave 3 up move. This looks like a very optimistic long term view, most probably to good to be true!
Another possibility with the wave {5} now completed is that the index finished a medium term correction wave {A} up and we expect next the medium term correction wave {B} down, with an index remaining above 650 but most probably higher, in the range 900-850. We can also not exclude that we have finished a long term correction wave [B] up and that the index started a long term down move for the wave [C] below the start of the [B] wave or below 650. Wait and see...
I am using a slightly faster SATS2 now on the daily chart. This will give some more entry and exit points, but the advantage is that it will also be faster at the main turning points. We will not trade if it is obvious that we are looking at a "false" SATS2 signal.
Indicators are turning up.
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