Advanced GET Trading Blog: An $SPX Outlook

With the recent profit taking in the market I wanted to update the monthly S&P chart ($SPX) that I have posted in the past.

A major level of support in the market was 1360.00 represented by the 1X1 Gann Level (Red Line). Breaking that level indicates that we are do for a profit taking phase or most likely an Elliott Wave 4. We have two levels of support coming in around 1257.00 our Gann Level and a 61.8% retracement which is typically the max retracement level for a Wave 4.

We do have some hope on the monthly chart for a bounce here, however there are a few things that concern me. First, the Oscillator does not show the great strength that we normally like to see in a Wave 3 (2004-2007). Second, in a Wave 4 the oscillator is supposed to return to zero and we can see that we are no where near zero even though the market is at it's max level of retacement for Wave 4. I do not foresee this turning out to be a typical 5 wave pattern because of these warning signs.

What does the future hold? It's hard to tell. From our research we know that the end of Elliott Wave 4 is difficult to predict in real time and that during the Wave 4 you should hold out and wait until the end to start trading again. That is where I am at, in my long term holdings I am in cash and will remain in cash until the market can show me something a little more predictable.

Ron Wheeler