More to Come?

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The S&P 500 was all over the place on Monday. It was up strongly early in the session, but then fell back below Friday’s low before finishing with a moderate 0.7% gain. Breadth was positive by a 4:3 margin but the up/down volume ratio was little better than flat. Total volume fell by 8%, but remains above its 21-dma. The daily Coppock Curve still has a bearish bias for 22 of the 24 S&P industry groups.

In one of those Elliott Wave conundrums, the daily range chart has a clean five-wave “look” to it while yesterday’s action has given something of a corrective flavor to the hourly chart. This bears some watching (no pun intended), but suggests that the fifth wave may be extending into five waves of its own. Tuesday’s action will help determine whether that is the case or whether the index has begun a somewhat volatile corrective process.

S&P 30-Minute HLC

With that in mind, most conventional short term momentum indicators are at oversold levels. However, we will allow for the possibility that these may be “bad oversold” levels, especially given the fact that the daily Coppock is positioned to maintain its bearish bias for another 5-8 days.

Given the action of the past two days, our focus is now on the October 2 low at 1020. A break of that level will effectively signal that the rally from the July lows is over. Below that, 1013 is a 38.2% retrace of the July-October rally and 985 is a 50% retracement. But, as explained in recent posts, more important support may be seen at 958-935 and 884-869.

Nearby resistance is at 1049-1054.