S&P 500 chart wave analysis

The Stock Market Week - 2/20/2009

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 484.74 points, or 6.17%. The Standard & Poor's 500 Index dropped 56.79 points, or 6.87%, while the Nasdaq Composite dropped 93.13 points, or 6.07%. The Consumer Staples sector was the strongest sector last week followed by the Health Care sector. The Financial sector was the worst performing sector of the week followed by the Energy sector. S&P 500 chart wave analysis and technical indicators suggest that the downtrend might be close to completion with the target around 650.

Standard & Poor's 500 Index Trend Analysis Standard & Poor's 500 Index is in a long-term down trend that started on 10/11/2007 at 1576.09. According to the Elliot Wave Principle, the market’s progress ultimately takes the form of the five waves structure. The first (I) wave down has been completed on 1/23/2008 at 1270.05 and dropped almost 20%. According to the Wave Principle, the third wave is the strongest and the broadest and it generates the greatest volume and price movement. The third (III) wave down has started on 5/19/2008 at 1440.24 and dropped more than 48.5%, reaching 741.02 level on 11/21/2008.

Standard & Poor's 500 - Long-Term Trend (two years)

The fifth (V) wave is in progress now. It has started on 1/69/2009 at 943.85 and dropped more than 20% so far reaching 754.25 on 2/20/2009. The fifth (V) wave has three sub waves: 1. - a, b, c, d, e, f, g structure 2. - a, b, c structure 3. - a, b, c, d, e . . . structure Sub wave 3 is in progress now.

Standard & Poor's 500 - Medium-Term Trend (one year)

In three waves structure the sub wave 3 is usually similar to the sub wave 1. The sub wave 3 has formed a, b, c, and d sub waves; the e sub wave is in progress now. To complete the pattern, the sub wave 3 should complete e, f, and g sub waves. In this scenario, the downtrend might be completed in approximately a week or two with the target around 650.

Standard & Poor's 500 - Short-Term Trend (six months)

Daily Williams' % Range and Lane's Stochastic are oversold while weekly Williams' % Range is strongly oversold. More than 20% of S&P 500 index members are oversold while only one is overbought. Technical indicators confirm the wave structure analysis that the downtrend might be close to completion.

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