SP 500 - Elliott Wave Update ~ 19 April 2013

Its a matter of support, resistance, channeling, possible backtesting, gaps up and/or down that'll help determine the wave structure in the next couple of days.  Monday should add a lot to the current squiggle structure.

First things first, we are assuming the 1597 SPX high was the cycle wave b "top".  Therefore if this is true then we are looking at counting impulse structures to the downside to begin the count on 5 Primary sized cycle "c" waves. That's the beauty of EW count logic.  If these are "corrective waves" since the top, then simply put, there will be a new top in the future at some point. Hurray! We got the bull count covered huh?

But we do seem to be impulsing nicely from our recent top so my count will be skewed toward making sense of it.

SQUIGGLES
The market ended today at the top of the "base" channel today. If the market can gap up over that come next week, then we are looking at a likely Minute [ii] wave. A gap up can cause the market to easily run to next resistance area of 1570-1573.  If that happened we are definitely labeling this as Minute [ii] bounce due to its size and relationship to the previous decline.

Therefore a pop up will likely at least backtest the broken up channel line and also form a nice Head and Shoulders topping pattern.

If Monday obeys the base channel and does yet another gap down, then we could be looking at a [i] - [ii], (i) - (ii) sequence and a break under the base channel and horizontal support at approximately 1538-1539 SPX causing panic and a wave (iii) of [iii] (otherwise known as the "third of a third" wave).  

OUTLOOK:

In this case since e-mini futures are also up against its downtrend line, Sunday night's future movement should perhaps give us an indication.  Either way the basic premise is this: In a bear market cycle wave "c" all rallies are to be sold into.  This was the way the 2007 - 2009 decline progressed.  

I will say this:. Via Sentiment Trader, all of their "intraday" oscillators and sentiment indicators are in or near "overbought" territory, not oversold. This includes their STEM MR and NASDAQ models, cumulative tick,     price oscillators, TRIN, UP volume and Up issues ratios, VIX and VXN strength. However CPCE amd ISE  put/call are not overbought so for that reason alone may cause a Monday "pop" upwards. But for the most part this is how a "sideways" movement can work off deeper oversold conditions while maintaining price and "setup" the market for a ripe decline.  So a somewhat ideal setup for a sharp - and surprising swift - decline is at least in place right now.

We'll see, things are getting interesting.