Sp500 Update 23oct11

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Andys Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Weekly Big Picture

c( A )

w

x

y

This is has been our longer term wave count for quite some time. So far there has been nothing in the recent price action to alter this view.Bigger picture, 1345 still looks like a significant market top, though the (B) wave is probably not complete. Wave z should last until theend of year. Presidential election years are typically good years for the market. This wave count suggests otherwise....

( B )

x

a

b

z

- B -

( C )

Important Top at 1345

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S&P 500 ~ Daily

x

y

a

b

c

d

-w-?

-x-?

-y-?e

x

The proposed -x- wave with e-wave took an extra week longer than we expected, but the result is the same. The move lowerhad an unfinished look about it, exemplified by the extreme choppy/consolidative bounce from the 1100 lows. As it has beenpointed out in the last several weeks here, taking out 1100 almost looks like a certainty. Bears will need to tread more carefullyonce 1100 gets taken out, though. At that point, wellbe witnessing Daily RSI divergence and headingtoward medium term chart support in the low 1000s

z

REPRINTED from 9/25/2011

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S&P 500 ~ Daily

x

y

a

b

c

d

-w-

-x-

-y-e

x

On our last S&P 500 Update we wrote: taking out 1100 almost looks like a certainty. Bears will need to tread more carefully once1100 gets taken out, though. At that point, well be witnessing Daily RSI divergence and heading toward medium term chart support inthe low 1000s. That was an understatement. The S&P500 broke below 1100 and then staged a tremendous bounce from a seriousBEAR TRAP. The count weve been on, though, was somewhat useful in keep us away from this bear trap. Wave x certainly

concluded at the 1075 low. Given the powerful strength

of the initial move off that low, Wave z isprobably a contracting triangle. We shouldexpect several weeks ofwhipsaw congestion before Wave zconcludes.

za

b

c

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S&P 500 ~ Daily

Every few weeks I visit some Orthodox Elliot Wave websites to see how theyre counting the market. Not surprisingly, some

folks are attempting to label the decline as five-wave move lower as detailed below. Its a shockingly poor count given the factthat none of the waves lower can be counted as impulses. The important takeaway, though, is that theres a large community ofpeople who believe this is a wave-2 bounce, therefore the 61.8% retrace will be sold hard on the first go.

1

2

3

4

5

The market should experience strong resistance into the 1258area which is also chart resistance. It should be a newsy

Monday as the EU ponders more and more bailouts. The markethas been rallying into the various pronouncements--tradersshould expect a Sell the News move this week.

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S&P 500 ~ Weekly

I remain stuck on the idea that were carving out a Head and Shoulder pattern on a much larger scale. The left shoulder was along-enduring and complicated pattern. It shouldnt surprise us to see the right shoulder be equally long-enduring and messy.

LeftShoulder

RightShoulder

Head

H&S withinthe larger

H&S setup

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S&P 500 Daily: Support and Resistance

Short term support for bulls lies at 1191. If that level gives way, there is no real support until 1121. As noted earlier, the 1258area is going to be strong resistance. Above there, 1296 should also be good resistance--that level was an important pivot

during the several month congestive range between March and July.

a

b

x

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DISCLAIMER WARNING DISCLAIMER WARNING DISCLAIMER

This report should not be interpreted as investment advice of any kind. Thisreport is technical commentary only. The author is NOT representing himselfas a CTA or CFA or Investment/Trading Advisor of any kind. This merelyreflects the authors interpretation of technical analysis. The author may or

may not trade in the markets discussed. The author may hold positionsopposite of what may by inferred by this report. The information contained inthis commentary is taken from sources the author believes to be reliable, but

it is not guaranteed by the author as to the accuracy or completeness thereofand is sent to you for information purposes only. Commodity trading involvesrisk and is not for everyone.

Here is what the Commodity Futures Trading Commission (CFTC) has saidabout futures trading: Trading commodity futures and options is not foreveryone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Beforeyou invest any money in futures or options contracts, you should consideryour financial experience, goals and financial resources, and know how muchyou can afford to lose above and beyond your initial payment to a broker. Youshould understand commodity futures and options contracts and yourobligations in entering into those contracts. You should understand yourexposure to risk and other aspects of trading by thoroughly reviewing the riskdisclosure documents your broker is required to give you.

Wave Symbology

"I" or "A" = Grand SupercycleI or A = Supercycleor = Cycle-I- or -A- = Primary(I) or (A) = Intermediate"1 or "a" = Minor1 or a = Minute-1- or -a- = Minuette

(1) or (a) = Sub-minuette[1] or [a] = Micro[.1] or [.a] = Sub-Micro

PLEASE NOTE THAT THERE IS ADDITIONAL INTRA-WEEK AND INTRA-DAY DISCUSSION ON TECHNICAL ANALYSIS AND TRADING ATTRADERS-ANONYMOUS.BLOGSPOT.COM

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Sp500 Update 23oct11