S&P not yet ready for a fall towards 1666
September 27, 2013
S&P 1650 or 1720?
October 3, 2013

Despite the fears of a government shutdown and what could this imply for Growth in the US, S&P moved north today after falling from 1730 to 1674.99. The index has made a nearly 61.8% retracement of the 1627-1730 move. Our first target was 1688 and our second target was 1666. Currently the index has changed its short term trend to up again and faces a challenge at the 1705-1715 resistance. The index has made a downward move towards 1675 that looks more like  a correction. Since the decline is not a clear impulsive wave down, our preferred wave count labels the decline as wave A of the correction, and we now expect for wave B and C to unfold as shown below.

spxD

However there is an alternative scenario that is also very possible. This scenario implies that the entire correction is over and we are now heading towards new highs. For this to happen, the index must hold above 1678 for now until we see 5 waves up from 1675. The cloud support as shown below has held and if prices pull back down below 1675, we should expect to see a decline at least towards 1660 and why not a test of the critical support at 1630-40.

spxd2

The longer term trend remains in favor of and we should take notice of this fact and not go 100% short at this level. I continue to believe that bulls have more to lose at 1700 than bears, but no long position should be held if prices break below 1675. If this happens I expect a new lower low below 1630 to be seen soon after the initial support fail at 1675. If 1630 support fails, I expect the index to move towards 1500. For more updates, analysis and a view of my trades, become a subscriber today.

As always, thank you for taking the time to read my new post.

A term used to describe a trader who is expects that a particular asset – be it a commodity, currency or product – to rise in value. The opposite of a ‘bear’.

The idea is that bulls attack by bending their heads and poking their opponents upwards with their horns, symbolising the fact that they are buyers, driving prices up.

Beliefs held by the aforementioned ‘bulls’ of the trading world, are described as bullish. Characterised by a generally optimistic outlook on the state of a given asset, a bullish outlook would suggest that a rise in value is imminent. Opposite of bearish.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.