After the big sell off on Monday the market basically traded
nearly sideways in a choppy fashion the rest of the week. Looking at a
Daily Chart of the S&P 500 it appears it has completed its 2nd Elliott 5
Wave pattern to the downside and is beginning a potential corrective zig zag
rally similar to what occurred last Spring as highlighted by the purple rectangle.
On a short term
basis the S&P 500 held support this week near its 50% Retracement Level
(calculated from the 11/21 low to the 11/28 high) just below the 820 level and
is developing a consolidation pattern (brown lines). If the S&P
500 can rally above the 900 level it's next area of upside resistance would be
in the 945 to 955 range which corresponds to its 50 Day EMA (blue line) and
downward trend line (purple line) connecting the October 14th and November 4th
highs. Meanwhile if the S&P 500 is unable to rise above the 900 level
and comes under more selling pressure once again look for support near the 820
level next week.
for the Dow notice it also held support near its 50% Retracement Level near 8175
(calculated from the 11/21 low to the 11/28 high) as it developed a
consolidation pattern (brown lines). If the Dow can rise above 8800 its
first area of upside resistance would be at its 50 Day EMA (blue line) near 9075
while the next area would be at its downward trend line (purple line) connecting
the October 14th high and November 4th high near 9400. Meanwhile if
the Dow is unable to rally above the 8800 level next week then look for support
at its 50% Retracement Level near 8185.
Nasdaq is also developing a consolidation pattern (brown lines) as it held
support near the 1400 level this week. If the Nasdaq can rise above the
1535 level then look for resistance to occur either at its downward trend line
(purple line) near 1620 or at its 50 Day EMA (blue line) near 1670.
if the major averages are going to make another move higher next week watch the
Banking Index (BKX). The BKX has rallied back to its downward trend line
(black line) near the 48 level. If the major averages are going to
move higher next week the BKX will have to break above this downward trend line
with the next area of resistance around 52 which is where its 50 Day EMA (blue
line) and 38.2% Retracement Level (calculated from the late September peak to
the November 21st low) reside at.
far in 2008 our ETF Strategies have worked the best with our SPY ETF which tracks
the S&P 500 up +33% versus the S&P 500 which is down -40% for the year.
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