S&P Elliott Wave Analysis: Hitting All-Time Highs

S&P pushed above 1800 yesterday but buying power was exhausted and a downward correction was inevitable. Prices are moving upwards in an impulsive pattern and are making new all time highs as expected since the decline from 1775 to 1746 was corrective. The current downward move is most probably part of a wave 4 correction that has already reached near the 38% Fibonacci retracement. Prices have most probably made wave 1 up from 1747 to 1773,44, wave 2 to 1760,74 and wave 3 to 1802,33. Wave 4 is the wave are currently in, as we expect a new all time high to be reached once the downward correction ends.

The above chart is an updated chart from when we initially posted the correction idea through our twitter account. Prices are making a downward move and we expect the coming low to be higher than the last corrective low at 1760. Moreover, according to wave theory, it would be ideal for this move not to move inside the 1773,44 area as this means that wave 4 would overlap wave 1, something that is not permitted. If prices reach that level, would mean that the decline is not wave 4 but something else.

Another point we should note is the volume by price. Watch the volume bars near the highs and near the lows and beginning of this upward move. This is a bullish sign. Volume is very weak near the highs relative to the lows where the move started. If an important top was made at 1800, then we would also witness increased volume bars.

Concluding, we see this decline as a corrective pullback, expecting the uptrend to resume. For more detailed analysis and live analysis on S&P, together with my trades on this index, can be obtained if you become a member. As always, thank you for taking the time to catch up on my thinking.

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