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Special Elliott Wave S&P500 Bulletin   

For May 5, 2009

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Ananth Acharya

DRAMATIC REVERSAL AHEAD!!

I am back after a complete system rebuild, needed due to a virus attack.

While I was away, the S&P500 has been quite volatile and yesterday’s rally appears to signal a dramatic reversal ahead for the markets. The attached charts are more or less self explanatory.

The rally from March 30, had me flummoxed for quite some time, continuously moving ahead in 3-wave patterns. Ending Diagonals (EDs) especially are very difficult to forecast as they unfold. The only indication we have at this time is the rally in 3-wave patterns, forming a rising wedge formation.

One-hour chart of the S&P500 showing the Ending Diagonal chart pattern very near completion. Chart by Elliottian.com Data by eSignal.com .

Another alternative pattern, which also fits in at this stage is a Double Zigzag (DZ) from March 6, 2009. Even in this case, the rally is doomed to a complete retracement, sooner than later.

Five-minute chart of the S&P500 showing the Ending Diagonal chart pattern from another perspective. Chart by Elliottian.com Data by eSignal.com

For tomorrow, May 5, 2009 expect SP500 to rally ahead to 917-920 range before a reversal sets in. The reversal however would get confirmed only when SP500 drops below 880 levels once more, which should happen sooner than later.

One-minute chart of the S&P500 showing Double Zigzag with projected target in the black rectangle. Chart by Elliottian.com Data by eSignal.com .

This pattern unfolding in this rally is not confirming any bullish scenario at the moment.  Longs would be best avoided at this stage.

Suggested Elliott Wave Reading

Forecast Change for Elliott Wave Followers by Matt Blackman http://sfomag.com/article.aspx?ID=1218

Short Overview of Elliott Wave Principle

http://www.indiacharts.com/EW.htm  

Elite Trader’s Secrets by Richard Swannell (Free eBook)

ftp://ftp.elliottician.com/pub/ebooks/ERP1Results2003.pdf

Elliott Wave Principle by A.J. Frost and Robert Prechter

http://www.elliottwave.com/books/ewp/default.aspx?code=oco 

R.N. Elliott's Masterworks edited by Robert Prechter

http://www.elliottwave.com/books/rn_masterworks/default.aspx?code=oco

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