iamthewolf

Elliott Wave: Week of 3/11/19 - Look familiar?

SP:SPX   S&P 500 Index
A great deal of time has been spent between 2600-2800. Another rejection at resistance (2800+) keeps us in that range once again. Surely a familiar place where many positioning decisions have been made.

In Elliott wave terms the rejection, thankfully, completes wave B and provides valuable information about what to expect. The shape of wave B shows strength with minimal pullback between initial lift from 12/26/18 and transition to the wedge formation that completed at 2816. It indicates caution for magnitude of a subsequent wave C downward move. Similarly, the retrace from December 2018 low of the September 2018 high exceeded .618 and then .764 to confirm strength and thus caution.

Waves are generally self-similar, and expectation is this time is no different. The pattern leading to the September peak also had a rapid thrust, shallow pullback and then ending wedge . The wedge was exited downward at October 2018's decline. We now see a similar pattern after an even steeper rise from December's low. The wedge has now been violated downward by last week's decline. Note how the initial decline this time is slightly larger than the same approximate area in early October. Comparison supports the potential for the current decline to exceed the previous, with the decline's magnitude outlined in several previous charts.

As with the ride up, targets appear for the move down. Last week saw pauses at several lower Fibonacci levels based on extension from February 2018 to September 2018. More important Fibonacci levels are those from March 2009 through September 2018. The 2698 area is one of those levels. In addition, we're once again below 200d sma and face the 50d sma below current levels. The lower boundary of 2600 has provided general support throughout the range bound period mentioned above.

Risk at present is still to the downside with excellent new data points to guide navigation and positioning. The Bat pattern is still in place with potential for a larger correction. The subsequent move after the current decline should provide excellent opportunity for higher levels. Too early at present to go into details about that.
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