This post by Daneric40 has been promoted from StockTock Social.
Primary Count:
Wave 3 of 5 is underway. Lets get to the numbers. I feel I have 4 solid pieces of evidence from different sources that point to the same near term target areas:
- The SPX trendlines. The market is now trying to get toward the lower trendline.
- S&P minis Futures. The minis are now striving for the lower trendline.
- The SPX blue wave 1 and 2 fibonnaci reference points for blue wave 3 down. Fib 1.5 target = 780. 1.618 = 772
- The SPX sub wave (red on chart) wave 1 and 2 of 3 Fibonnaci reference points. Fib 1.5 target = 773 1.618 = 768
So you can see I have 2 trendlines, one using the mini-futures and the other SPX cash index that point in the same area as the 2 Fibonnaci targets for 2 separate wave references. That powerful confluence of data is hard to ignore.
So I expect the SPX to hit the 768-780 range before long. Then a sharp bounce for blue wave 4, most likely a zig zag up since wave 2 was a sideways correction.
As far as timing, the strong end of day selloff suggest an immediate continuation of the downward pressure. In fact, this would be the very likely spot for a “breakaway gap” to occur at the open. And then the above targets should be hit sometime tomorrow.
OPEX Friday will bring even more volatililty. Would wave 4 back to the upper trendline be the OPEX rally? One can only guess.
I must also mention that the 768 -780 range is just the starting target for wave 3. You then have wave 5 of 5 that will also try and make it back toward the lower trendlines. When will it all bottom and the last low to occur?
I will not venture a guess. For this to all be over in a day or so is starting to look remote. The selling pressure has just started to really kick in.
How low can it go? Well, 700 is not out of the realm of possibilities as I may not be using the correct starting point.
thanks for info…i’m relatively new to TA and EWT…but its very interesting the way the market works in patterns. Your information supports my general feeling that forward earnings for s and p times p/e of 10 gets you in the 650-750 range…maybe even lower if very long recovery.
More data pointing the same direction….down
I went over some S&P500 trendlines of over a decade ago, and found that today’s low of 806 hit a trendline drawn from April 1997 to October 2002. I don’t think that this trendline is all that important, but I wanted to point it out.
Moreover, I did find something more interesting. If you look at your monthly charts and go back to the 1980′s ending in December 1994, you’ll find a fairly stable upward trendline that when projected out, it ends at approximately 883 this week. That was a crucial level to beat if we were going to have that 4th wave rally above the 900′s. That twin peak we had from 11/13-11/14/08 seemed to rally right back up to it and make a head fake above it on a grander scale.
Finally, I am going to spend some time tonight looking at the standard deviation out of the bollinger band. On a weekly timeframe, it seems as if bottoms are at about 2 SD below the bollinger band’s middle line. We aren’t that low yet. I calculated 700. Here’s my math for anyone to verify:
984-2X(984-845)= approximately 700