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S&P 500 Weekly ~ Bull Trap?

One of the basic elements of a bull market is that it continues to set new highs while the lows become higher. Another aspect of a real bullish sequences is that when a previous high gets ‘taken out,’ the market should decisively take it out and not look back for awhile. So, in that regard, this latest development on the S&P 500 should be very disappointing for bulls. As of this moment, the S&P500 looks like a market that set a “marginally higher high” and then quickly reversed back below that level--it’s beginning to look like a “bull trap.”
Previous resistance zone should’ve been support

Andy’s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Daily with Primary Support
(B)

REPRINTED from 4/29/2012
g?

“z”
i?

e

c f

h?

d a

b

1202

Shocker! The S&P 500 double bottomed comfortably above key support and put in a nice rally last week. The longer term wave counts and structure continue to suggest we’re at or very close to the end of this large (B) wave. But, it makes much more sense to enter the short side of this market only after getting a confirmation of a break down. From just the rally off the 1202 low, the market has failed to break even a previous low. Why bother shorting it until it does? That said the 1440 level, as highlighted on previous reports, looks like strong resistance. So, I would be initiating shorts in front of that level (1425-1440) or I would short on a break down below 1338. Everything in between looks like a “no man’s land.”

Andy’s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ 60 Min. Chart
I’m not sure what the proper ‘degree’ labeling should be here and the count from the 1357 low can go either way. This is just a “stab” at what the very short term structure might be. On thing is for sure, the move down from 1422 was NOT a classic “impulse,” to the chagrin of classic Ellioticians. There’s no sign of peaking action to this market, so a full probing of the short term resistance area 1408-1414 seems in the ‘offing’ to begin the week.
[b] [e] If this is an expanding triangle, the e-wave must exceed the top of the a-c trendline. [c] [c] [f] [a] Daredevile longs/bulls should probably run a “stop loss” at 1392 for any short term long positions. [e]

[a]

[d]

[b]

REPRINTED from 4/29/2012
[d]

[g]

Andy’s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ 240 Min. with Support/Resistance
(B)
“z”?
1422

(B)
“z”? e c

a

b

d

In the last update we suggested that the S&P500 would “probe the 1408-1414 area” before any kind of decline. Indeed, the market hit 1415 and then ran into some difficulty. The wave count up from 1202 is, admittedly, difficult to decipher. What’s not difficult to decipher is the fact that the ‘tenor’ of the market has changed in the last several weeks. It’s difficult to know whether or not the (B) concluded at the 1422 or 1415 high, but in either case, this market should not be able to retrace a 61.8% if it has truly peaked.
1202

This looks like a ‘sell rally’ market. 1388 should be used as a stop loss level for any near or long term short sells. We last cited 1392 has a good “stop loss” for any ‘daredevil’ longs--that was a good level to have left this market. If you’re still long and holding on, then use any break of 1338 to get out.

Andy’s Technical Commentary__________________________________________________________________________________________________

S&P 500 ~ Double Head and Shoulders Top?
Left Head Right Head

Left Shoulder

Right Shoulder?

At the risk of “jinxing” things for the Shorts out there, I must highlight the developing complex Head and Shoulder Top**. It would have a doubleheaded look about it and it would also amplify the importance of the 1338 level…a level that we’ve been talking about for several weeks now.

** Please note that we’ve seen plenty of failed “head and shoulders” tops on the way to 1422. So, don’t put too much faith in this pattern, especially if the blabbering bobbleheads of CNBC starting mentioning it.

Andy’s Technical Commentary__________________________________________________________________________________________________

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Wave Symbology "I" or "A" I or A <I>or <A> -I- or -A(I) or (A) "1“ or "a" 1 or a -1- or -a(1) or (a) [1] or [a] [.1] or [.a] = Grand Supercycle = Supercycle = Cycle = Primary = Intermediate = Minor = Minute = Minuette = Sub-minuette = Micro = Sub-Micro

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