APPLE ready to bounce?
June 26, 2013
S&P Elliott wave analysis.
June 30, 2013

S&P has managed to make an upward bounce from 1560 to 1607 when most people where talking about a collapse and another ‘end of the world’ bearish scenario. Here at Trading2day we were bullish S&P from 1585. Trading2day subscribers were notified of an expected upward bounce towards 1610-1620 even when prices were trading at 1560. The upward bounce was signalled and tweeted to subscribers right on time to see our position profit nearly 20 S&P points.

S&P has made until now a three wave downward move from 1687. This downward move can be either counted as a corrective pattern or as a couple of 1-2 waves. Another very possible scenario is that this decline from 1687 is only wave A of the correction implying that we are now in wave B  and we should expect a wave C below 1560.

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Lets take each one scenario at a time. 1st scenario: The entire correction is over at 1560. Looking at the shorter term time frames, this scenario is very possible. Its strengths is that the decline from 1687 to 1598 is overlapping and the entire move to 1560 is in three waves. Weakness of this scenario is the bigger picture. It is very possible that at least the move from 1343 is over and we could be starting a bigger degree correction. This implies that it is very difficult to see a new all time high. If prices move upwards impulsively from 1560 then it will be very possible to see new highs. If prices get stuck at 1620-30 area, expect selling pressures to come back.

2nd scenario The top is in and we have made a couple of 1-2 waves. The weakness in this scenario is the 1st wave down from 1687 to 1598. It is not a clear wave. Many see it as a leading diagonal pattern and we cannot ignore that possibility. Strength of this scenario is the bigger picture that does not rule out a big correction as the move from 1343 looks complete. For this scenario to remain valid, prices firstly should not move above 1655. Secondly, the rise from 1560 should not be and should top near the 50%-61.8% Fibonacci retracement. Thirdly, sellers should come back near 1610-20 area and push prices down impulsively and with enough strength to break below 1594-80-60 support levels.

3rd scenario Only the first part of the correction is over. The three wave move from 1687 is only wave A and we should expect wave B to most probably make a double top. Then it will be followed by wave C down that could reach 1520-30 price level. The strength of this scenario is the bigger wave pattern that suggests a big correction could come as the move from 1343 seems complete. If this is the case, we should expect wave B up to move towards 1650 area and last near a month. So end of July could see the market start wave C down with 1520 area as target.

Concluding, we see from the three possible scenarios that there is a downward bias. We see that it may be time for a deeper correction and that 1650 area poses an important resistance level that should be used as stop for bears. On the other hand, the upward move from 1560 looks impulsive but not complete yet. 1560 if broken will be a sign of more weakness to come and push prices towards 1500. If you want to see our trades or more detailed analysis sent to your e-mail, become a member today and add value to your trading.

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

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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.