Wednesday, October 7, 2009

1069 or Bust

On Tuesday, the S&P 500 rallied 1.4%. Both breadth and up/down volume ratios were positive by about a 5:1 margin. Perhaps most importantly, volume increased by 15%.

While the S&P is still short of last Tuesday’s high (1069.62), the rally of the last two days can be counted as a complete five-wave pattern. Moreover, hourly momentum is at its highest level since the liftoff from the mid-August low and the index penetrated the trend channel we highlighted in yesterday’s post. This combination suggests that the five-wave rally is the first leg of a larger pattern.

S&P Hourly with Coppock Curve
That said, the fact that the index remains below 1069 leaves open the possibility that this rally is nothing more than a reaction within a larger downtrend. So, in many ways, 1069 is an important benchmark.
Obviously, 1070-1080 is still first resistance. Second resistance is 1121-1156.

So far, the index has held indicated support in the 1036-1015 range. A decline through 992-991 will lock in the July-September rally as a complete Elliott Wave pattern. The July low (869) continues to be tactical support.

The March-June rally was 97 cale

No comments:

Post a Comment