The S&P 500 index is forming a triangle pattern
The Stock Market Week - 1/16/2009
|All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 317.96 points, or 3.70%. The Standard & Poor's 500 Index dropped 40.23 points, or 4.52%, while the Nasdaq Composite dropped 42.26 points, or 2.69%. |
The Financial sector was the worst performing sector for the fourth consecutive week followed by the Industrial sector. The Consumer Staples sector was the strongest sector last week followed by the HealthCare sector.
The Healthcare is the most overvalued sector, followed by Utilities, while Gold and Drugs - Generic are among the most overvalued industries.
Financial is the most oversold sector, followed by Basic Materials while Regional-Pacific Banks, Railroads, Oil Gas Drilling/Explore are among the most overvalued industries.
|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 (III) 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. The third wave usually has the five-sub waves structure itself. It has formed four waves so far.|
|The third wave has reached the long-term support trend line in mid October. Since mid October the chart is forming a horizontal expanding triangle pattern. Usually a horizontal triangle pattern presents a corrective wave. The triangle reflects a balance of forces and causes a sideway movement. The triangle pattern consists of five overlapping waves A-B-C-D-E that subdivide 3-3-3-3-3. Usually the corrective wave resets technical indicators to natural to prepare the next price move into the major trend direction. Weekly Lane's Stochastic and Relative Strength Index have been reset from oversold to 55.55% and 46.48% accordingly. Weekly Williams Percentage Range is oversold, and this is an indication of the beginning of a sharp down move. The horizontal triangle support is near 600, and resistance around 959.|
|Presented by www.thegreedytrader.com Research Group.|