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Daily chart:
And if downturn continues target is 1.3480:
Shorter term pattern:
Notice the conjunction of the larger pattern's 2.618 level (approximately 1.5465) and the 1.272 level of the smaller pattern (aprroximately 1.5440). This was where yesterday's rally ran out of energy, although there are wicks (spikes) going up to 1.55.
Short term up pattern.
30 minute charts.
First the long term--a quarterly chart:
The market has traded down close to the gently sloped uptrend line formed from the 1982 and 1990 lows. Another more steeply sloped line joins the 1990 and 1995 lows. That line held in the bear market decline of 2000-2003, but was soundly broken in the current sell-off.
The region of the 2003 low and the low of last week is approximately a 61.8% retracement of the move from the 1990 low to the 2000 high. The next level down would be in the region of 550 to 600.
Now two shorter term patterns in the current move down.
First an impulsive move with an alpha low at 1200 and a beta high at 1313. The 4.236 delta is at 835. This pattern can be seen as having been completed in the panic sell-off of Friday, October 10.
But it was not the end of the decline.
There is a new pattern that can be seen with an alpha low at 845 and a beta high at 1007. The delta 1.618 target is around 745, basically the region of the lows on Thursday/Friday, November 20-21.
We have rallied off these lows, the initial rationale being the announcement that Geithner would be Secretary of the Treasury for Obama.
If the downtrend continues, the 2.618 delta target would be around 582, which would also coincide with the area of the next downward fibonacci support seen in relation to the long term bull move from 1982 to 2000.
1.618 delta target was 745.10, low in final sell-off was 746.15, before bouncing a little at the close.
This morning the market opened up but found resistance at yesterday morning's support around 775. Since then we have sold down to the region of yesterday's close.
Showing the internal fibonacci levels of the rally from 1990 to 2000.
More than a DJ 30 chart, the S&P shows a bear market that began at the 2000 top and is still ongoing. The 2002-2003 bottom was a 61.8% retracement of the entire move from the 1990 low. Since then we traded up to a 2007 top less than 25 S&P points higher than the 2000 high (1576 rather than 1552).
We are now very close to touching that 61.8% retracement level again. To give some perspective of our relationship to the move up, we are trading in a range seen in the spring of 1997.
The next fibonacci level down would be between 550 and 600, which would take us back to territory seen in the autumn of 1995.
The grey line shows the slope of the initial rally in the 1980's before the exponential action of the 1990's. We are getting close to that line.
UPDATE--End of Trading Day
The 775 level did provide support early on, as the market bounced off this level and then traded into positive territory. But once again heavy selling came in during afternoon trading and the market easily broke through this support.
The impulsive move that ended last March (the alpha beta base having been formed in 2006.
A chart from last April:
The retracement since then:
This key level is around $730.00, the original alpha top. If this level does not continue to hold on a weekly basis, then the next level of support would be somewhere around $650.00. $660.00 would be roughly a 76.4% retracement. $647.00 would be the 78.6% retracement.
If it does hold, then we may be building a base for a new move up.
Still no breakout.
Pressure and compression against HAS candles and 13 day EMA, but once again an inability of this market to break through resistance on the upside.
On daily chart--still compressing beneath the resistance formed by HAS candle and corresponding 13 day EMA.
And on a tighter time scale the market is compressing within the range of the low on October 27 and the initial rally top two days later. The mid-level of this range is 1.2812--prices have been sprialling around this level throughout these first two weeks of November, first hitting the outer fibonacci bands within this range, then the inner bands. This morning the 38.2% level was hit (again). We have a slight bounce off this level at the present time..
Daily with HAS candles, 64 EMA and multi-period stochastics.
Two potential impulsive patterns. Notice how they relate to each other. A delta 1.618 target resistance at 1.2930 on the first, a minor resistance (1.272) at 1.2925 on the second. (And that resistance zone has initially shown some validity.
And both project a delta 2.618 in the neighborhood of 1.3060.
First, an updated daily chart showing the impulsive move that ended near the 2.618 delta target on October 28:
Then a 4 hour chart showing the initial correction of this move, taking the market back to the 1.618 delta level on October 30--corresponding to a 38.2% correction of the entire impulsive move.
This move up was quickly retraced. Since then we have been in a 3 wave irregular downward correction of the initial upward correction. First a swift move down to about 50%, then a zig zag downward pattern that made up the irregular Y (or B) wave, with the irregular middle leg of this pattern reaching the 61.8% level. Finally this morning we seemed to have bottomed out around the 78.6% level.
On an hourly chart you can see the pattern more clearly. Note that a momentum study like RSI would show a regular rather than irregular 3 wave pattern, with a low at the point of X, then a high at Y and a lower low at Z.
Right now, on a short term basis, the market is a little extended and overbought. But it is quite likely we will see more upside after either a pullback or a pause at the current level. It should be noted that European stocks and US stock futures are rallying, the S&P continuing the upward flag pattern it has been forming since the impulsive move up in stocks on October 28. Stocks could break out of that pattern to the upside today. The euro would very likely follow.