S&P 500 Daily and Weekly Candlesticks

These are some UGLY candlesticks on the S&P 500. The Daily is sporting a nice example of a three day “evening star” topping pattern.
The Weekly is another potential “evening star” on an even larger scale. As it stands, it has elements of a “shooting star” top. Bears would
need a weekly close below 1178 to confirm the larger pattern.

Daily Weekly

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 Daily with the 34, 55 and 144 day EMA

One of my “contrarian” beliefs is this: Bullish markets NEVER peak on bearish news--
they only peak on bullish news. So, it’s certainly possible that the Goldman Sachs/SEC
“news” did put in the top for now, but it’s very difficult for me to believe that it was the
conclusion of the wave up from the March lows.

34/55 holds
for bulls here

With that idea in mind, the bulls still have the moving averages pointing in their favor.
Presented here is the 34 (blue), 55 (green) and 144 (red) exponential moving averages.
34/55
bullish
The import idea here are the “crosses” of these averages. For a medium term trend
cross change, the 34/55 “cross” seems like a good guide--as long as the 34 remains above
the 55, the medium term bullish momentum stays intact. In the much “larger picture,” it
would take the 34 crossing below the 144 to change the longer term momentum/trend.

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (240 min.)

There are some Elliotticians labeling this last advance as some

kind of “impulse.” Here’s a guideline: an impulsive move should
not slow down in the middle of the progression, as is the case
inside the dashed blue box. Just observe how the shallow the
slope of the “net” advance is relative to the other legs up. The
price action within the blue box is “corrective” in nature.

Andy’s Technical Commentary__________________________________________________________________________________________________

 ( Z )??
“y”
c
S&P 500 June e-Minis ~ (240 min.) -3- -5-

-1-
-4-
a
The shorter term count from 4/4/10 had to be
adjusted a bit here to account for all of the d -2-
“corrective” action in the dashed blue box….
b
b
“w” e
c “x”
-5-
c
a

-3-

a
“x” -1- -4-
b

-2-
“Something” ended with the Goldman Sachs/SEC announcement. This
d
would be the wave count that ends the move up from early February. The
b EW Theory would be that this was a “double” that contained a triangle “x”
wave in the middle. The “y” wave was 50% of the price and time of the “w”
wave, which fits logically. If this is the proper count, then the market
a should suffer at least a 10% decline and 1214 will not be bettered.
e
“y” What I don’t like about this model is the numerous “touch points” of the
(X) proposed triangle “x,” and the fact that it didn’t really “thrust” out of the
c triangle when it concluded.

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (240 min.)

a?
If there is a way for a wave to take longer to c?
complete, then assume that it will….

f
d
b
g b?
“w” e “x”
c
-5-
c
a
-3-

a
“x” -1-
b -4-

d -2-
The “orthodox” crowd won’t like this count, but this is another good
b alternative. The prolonged congestion higher in the middle of the pattern
could have been one of those “diametrics” (seven-legged corrections). This
a wave count suggests more sideways or higher price action before we
conclude the wave up from early February. A break of 1175 would damage
e this idea.
“y”
c (X)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 Daily ~ “Tradable Ideas”

So, how might we turn these various ideas and concepts into a trading strategy? The last
report (4/4/10) highlighted the strong resistance that awaited the market at 1229 while the last
preferred wave count suggested one final move to the low 1200s. The fact that the market is
now sporting a reversal pattern into resistance should be a “red warning” light for bulls.
Medium term traders should be bearish/short this market, with 1214 looking like a nice “stop.”

Those who want to remain bullish should pay close

consideration to the near term support levels of 1174 (23.6%)
and 1149 (38.2%). A break of 1174 would suggest that 1214
concluded the advance that began in early February, a nice
“feather in the cap” for bears. 1150 should serve as major
support for any decline. Failure to hold that level should
send longs/bulls to the sidelines immediately.

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 Daily (Non-Log) With 200 day EMA

A few weeks ago, we emphasized the idea that there was nothing bearish looking about the S&P 500. While the overall wave
count was a mystery (and still is), several other technicals suggested nothing other than being long or neutral. As the market
levitates closer to the next zone of major resistance, the risk/reward shits away from being short term bullish to being at least
neutral. The market began the serious “panic” phase of it’s decline back on 9/22/08 in the price zone of 11781254. The
market will have memory of this date and those price levels. With the 61.8% retrace of the entire decline at 1229, it’s a pretty
safe prediction to suggest that the low 1200’s will be EXTRAORDINARY resistance. So, the question for S&P bulls/longs is
this: Do you risk an inevitable 10-15% correction in order to squeeze the last 4-5% out of this move?

Reprinted from 4/14/10

Wide Spread Panic

Began Here

Though I’m not a big believer in moving averages,

the 200 day Exponential Moving Average has
proven to be a very important indicator. Using this
line, longer term bulls have no issues until the
market decisively breaks this EMA.

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (180 min.)
Please note that this is modeling the June S&P futures. This is my preferred
case--it would be bullish in the very short term as it targets the low 1200’s. When -b-
-d-
the “thrust” is completed in the next few weeks, it should conclude the pattern up
from the mid-February lows and set the stage for a 10-15% correction. Sell in
May and Go Away? a
-e-
-c- b
“w”
(Y) c
b -5-
-a-

“x” This looks like an “irregular” triangle, and it

appears the “thrust” began with Friday’s lows.
-3-
a
a

“x” -1- -4-

b

-2-
Reprinted from 4/14/10
c d
b
“w”

a
e
“y”
(X)
c

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 Weekly (Log Scale)
Supercycle How does the bullish picture on the first slide fit into the longer term wave count? If this is a Primary -B- wave up from the Mar 09 lows,
Wave III then it SHOULD correct 60-80% of the decline and consume at least as much time as the -A- Wave down. With that in mind, this
(Euphoria) correction could run much longer and deeper than previously considered. If this is an -X- Wave, then it should be shorter and less
enduring than -B-. This is why, given the completed “look” of the correction up from Mar ’09, I had been labeling the move an -X-.

<B>

(B)

-X- or -B-
(A)

Reprinted from 3/13/10

<A>

(C)
-W- or -A-

Andy’s Technical Commentary__________________________________________________________________________________________________

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