S&P 500 index has a downtrend resistance alert

The Stock Market Week - 5/8/2009

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 362.24 points, or 4.41%. The Standard & Poor's 500 Index gained 51.71 points or 5.89%, while the NASDAQ Composite gained 19.80 points or 1.15%. The Financial sector was the strongest sector (22.25%) last week followed by the Energy sector (9.69%). The Technology sector was the worst performing sector (-2.23%) of the week followed by the Utilities sector (2.71%). The Basic Materials sector is the most overvalued sector followed by Services, while Publishing - Periodicals, Publishing - Books, Lodging are among the most overvalued industries. The Technology sector is the most oversold sector followed by Financial, while Computer Peripherals, Savings Loans, REIT - Industrial are among the most oversold industries.

Weekly S&P 500 Winners

Gains/Loses(%) Symbol Company Sector 19.90% PKI PerkinElmer Health Care 13.66% FLIR FLIR Systems Inc. Information Technology 13.58% MEE Massey Energy Co. Materials

Weekly S&P 500 Loosers

Gains/Loses(%) Symbol Company Sector -13.79% AOC Aon Corp. Financials -12.59% WPO Washington Post Co. Consumer Discretionary -8.55% DF Dean Foods Consumer Staples

Standard & Poor's 500 Index Trend Analysis Standard & Poor's 500 Index daily Greed/Fear Indicator and weekly Williams' Percentage Range are overbought, while daily and weekly Lane's Stochastic are strongly overbought. Weekly Williams' Percentage Range has bearish divergence. S&P 500 index has a downtrend resistance alert. The resistance is near 944. The short-term ABC zigzag pattern is almost completed.

Standard & Poor's 500 - short term ABC zigzag

Below is an example of the similar S&P 500 long-term ABC zigzag pattern with the following down turn.

Standard & Poor's 500 - long term ABC zigzag

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The upside potential is limited

The Stock Market Week - 5/1/2009

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 136.12 points, or 1.69%. The Standard & Poor's 500 Index gained 11.29 points, or 1.30%, while the NASDAQ Composite gained 24.91 points, or 1.47%. The Utilities sector was the strongest sector (4.61%) last week followed by the Consumer Staples sector (2.74%). The Financial sector was the worst performing sector (-2.65%) of the week followed by the Industrial sector (1.57%). The Basic Materials sector is the most overvalued sector followed by Conglomerates while Agricultural Chemicals, Chemicals-Major Diversified, Copper are among the most overvalued industries. The Industrial Goods sector is the most oversold sector followed by Services while Education Training Services, Drugs Wholesale, Rental Leasing Services are among the most oversold industries.

Standard & Poor's 500 Index Trend Analysis Standard & Poor#39;s 500 Index is in a long-term downtrend that started on 10/11/2007 at 1576.09. According to the Elliot Wave Principle, the market’s progress ultimately takes the form of a five wave 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. From a long term perspective there are two scenarios that we are going to consider: Scenario #1: The last fifth wave of the long-term down trend has been completed on March 6th at 666.79. The first wave of a new long-term uptrend is in progress. See the chart below.

Standard & Poor's 500 - Scenario #1

Scenario #2: The forth wave of the long-term down trend is in progress and almost completed. The last fifth wave down is about to begin. The fifth wave will retest the March low and possibly move further down. See the chart below.

Standard & Poor's 500 - Scenario #2

Now the price is near the resistance level. Weekly Lane's Stochastic is oversold. Daily technical indicators are close to oversold area as well. In both scenarios the upside potential is limited and chances are high that price will turn down soon. The support is near 805 and the next resistance is near 944.

Standard & Poor's 500

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S&P 500 chart has formed the broadening wedge

The Stock Market Week - 3/27/2009

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 497.80 points, or 6.84%. The Standard & Poor's 500 Index gained 47.40 points, or 6.17%, while the Nasdaq Composite gained 87.93 points, or 6.03%. The Financial sector was the strongest sector for the second week followed by the Industrial sector. The Utilities sector was the worst performing sector for the second week followed by the Health Care sector. Technology, Services, and Basic Materials are the most overvalued sectors while Agricultural Chemicals, Auto Parts Stores, and Copper are the most overvalued industries. Conglomerates and Financial are the most oversold sectors while Regional-Pacific Banks, REIT - Diversified, Gaming Activities, and REIT - Retail are among the most oversold industries.

Standard & Poor's 500 Index Trend Analysis In our last publication on February 22 we have suggested that downtrend should be completed in approximately a week or two (February 25 – March 6) with the target around 650. The S&P 500 downtrend has been completed on March 6th at 666.79. A strong uptrend is in progress now. S&P 500 index has reached 832.98 on Thursday posting almost 25% gain since March 6th. Standard & Poor#39;s 500 Index is in a long-term downtrend 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)

Since 11/21/2008 the S&P 500 chart has formed the broadening descending wedge. The formation might be completed, but there is a chance that it is still in progress. In this case the price may reach the resistance level and turn down to retest the support line.

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

Daily Williams' % Range (W%R) is strongly overbought and Lane's Stochastic is overbought. The price uptrend may pause for a while to reset technical indicators before the next up move toward the resistance line.

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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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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.

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

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.

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

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.

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

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S&P 500 resistance is near 965

The Stock Market Week - 11/28/2008

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 782.62 points, or 9.73%. The Standard & Poor's 500 Index gained 96.21 points, or 12.03%, while the Nasdaq Composite gained 151.22 points, or 10.92%. The Financial sector was the strongest sector last week for the second week in a row, followed by the Consumer Discretionary sector. The Utilities is the most overvalued sector now, followed by, Healthcare, while Gas Utilities, Drugs - Generic, and Major Integrated Oil/Gas are among the most overvalued industries. Industrial Goods is the most oversold sector, followed by Technology while Metals Fabrication, Multimedia/Graphics Sftwr, Copper 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 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.

Standard & Poor's 500 - Long-Term Trend

The sub wave 5 down of the long-term down wave three (III) is in progress. Elliot Wave principle considers the wave five as the last sub wave in impulse wave structure. The fifth wave is usually less powerful than the third wave; it shows slower speed of price change and presents bullish divergence between price and technical indicators. Daily and weekly technical indicators have bullish divergence. Bullish divergence is usually considered as an indicator that bears are losing power, and that bulls are ready to control the market again. Often bullish divergence marks the end of a downtrend, but it may mark the consolidation period before the next down move as well. The resistance trend line is near 965 now and the support trend line is near 738. It is quite possible that S&P 500 index will turn down to retest the support line once more.

Standard & Poor's 500 - Long-Term Trend

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S&P 500 technical indicators have bullish divergence

The Stock Market Week - 11/14/2008

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 446.50 points, or 4.99%. The Standard & Poor's 500 Index dropped 57.70 points, or 6.20%, while the Nasdaq Composite dropped 130.55 points, or 7.92%. Industrial Goods and Technology are the most oversold sectors, while Utilities and Healthcare are the most overvalued sectors.

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. The third (III) wave down has started on 5/19/2008 at 1440.24 and lost almost 43.3% reaching 816.69 level on 10/14/2008. The sub wave 5 down of the long-term down wave three (III) is in progress. Elliot Wave principle considers wave five as the last sub wave in impulse wave structure. The fifth wave is usually less powerful than the third wave; it shows slower speed of price change and presents bullish divergence between price and technical indicators. Daily and weekly technical indicators have bullish divergence. Bullish divergence is usually considered as an indicator that bears are losing power, and that bulls are ready to control the market again. Often bullish divergence marks the end of a downtrend, but it may mark the consolidation period before the next down move as well.

Standard & Poor's 500 - Long-Term Trend

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Major indices have formed a triangle chart pattern

The Stock Market Week - 10/31/2008

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 946.06 points, or 11.29%. The Standard Poor's 500 Index gained 91.98 points, or 10.49%, while the Nasdaq Composite gained 168.92 points, or 10.88%. Our Weekly Picks portfolio gained 17.24% for the week. All three major indices have formed a short-term descending triangle pattern. Usually, in a mature trend a triangle pattern is considered as a reversal pattern.

Dow Jones Industrial Average - Short-Term Trend

Standard & Poor's 500 - Short-Term Trend

Nasdaq Composite Index - Short-Term Trend

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. The third (III) wave down has started on 5/19/2008 at 1440.24 and lost more than 40% reaching 839.8 level on 10/10/2008. The chart has formed a short term descending triangle pattern. The chart retested its low on 10/28/2008 and rebound sharply from 845.27 to 984.36 just is four days. The sharp rebound from the support level confirms the end of the short-term sub wave 3, and it may be the end of the long-term wave (III) as well. The weekly Lane's Stochastic is still oversold, but other daily and weekly technical indicators are natural. The resistance level is around 1070, and then 1140.

Standard & Poor's 500 - Long-Term Trend

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Bear market technical indicators

The Stock Market Week - 10/10/2008

On September 9th, when S&P 500 index was at 1,242.31, we suggested that, the S&P 500 is now in sub wave three of the third down wave, which is considered the worse in the five-wave structure. In one month index lost 27.6% and closed on Friday at 899.22. The Standard & Poor's 500 index had suffered its worst week since 1933. All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 1874.19 points, or 18.15%. The Standard & Poor's 500 Index dropped 200.01 points, or 18.20%, while the Nasdaq Composite dropped 297.88 points, or 15.30%. The Consumer Staples sector has traditionally performed better than the stock market during market declines. The Consumer Staples sector was the strongest sector last week for the second week in a row, followed by the Technology sector. The Energy sector was the worst performing sector of the week followed by the Utilities sector. The Financial sector is the most overvalued sector now, followed by, Consumer Goods, while Tobacco Products Other, Regional-Mid-Atlantc Bnks, Home Improvement Stores, and Cleaning Products are the most overvalued industries. Conglomerates is the most oversold sector, followed by Basic Materials while Processing Systems/Prods, Aluminum, Metals Fabrication, Personal Computers are the most overvalued industries.

Dow Jones Industrial Average Trend Analysis Three months ago in our publication on July 11th we suggested that Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. The price was at 11,100.54 then, and the pattern price target was approximately 9000, that three month back sound like a very pessimistic prediction. Last week Dow Jones dived below 9000 level and close on Friday at 8,451.19. The sharp price drop moved daily William's Percentage Range (W%R) into oversold area, while weekly W%R is strongly oversold. The oversold W%R is usually considered as an early warning indicator that signals exhaustion of the sharp down trend and predicts that it may slow down and reverse soon. Daily and weekly Relative Strength Index and Lane's Stochastic indicators are still natural.

Dow Jones Industrial Average - Long-Term Trend

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. The chart has formed a falling channel pattern. The third wave down is in progress now. It has started on 5/19/2008 and it is now forming a sub wave three down as well. According to this wave count, the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure. The support line is broken. Daily and weekly William's Percentage Ranges and daily Relative Strength Index are oversold, while daily Lane's Stochastic indicator is strongly oversold. According to the technical indicators, the sub wave three might be close to completion.

Standard & Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis As we suggested previously, the Nasdaq Composite index had formed the long-term symmetric triangle chart pattern with sharp breakdown. The price target for a triangle pattern is usually derived by measuring the distance between the starting high point of the ascending triangle with the starting low point of the triangle, which is then projected downward from the breakpoint. According to our calculation, the projected price target should be around 1640. The Nasdaq Composite index price hit 1542.45 low on Friday. Daily Relative Strength Index and weekly Lane's Stochastic indicators are oversold, while daily and weekly William's Percentage Ranges and daily Lane's Stochastic indicators are strongly oversold. The sharp breakdown from the long-term symmetric triangle chart pattern could be close to completion.

Nasdaq Composite Index - Long-Term Trend

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Worst week for the US stock market since September 2001

The Stock Market Week - 10/03/2008

As we had mentioned in our previous publications, the S&P 500 is now in sub wave three of the third down wave, which is considered the worse in the five-wave structure. The recent financial events appear to be the worse in the history of US financial market so far. "America's economy is facing unprecedented challenges," president Bush declared. It was the worst week for the US stock market since September 2001. All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 817.75 points, or 7.34%. The Standard & Poor's 500 Index dropped 113.78 points, or 9.38%, while the Nasdaq Composite dropped 235.95 points, or 10.81%. The Consumer Staples sector was the strongest sector last week followed by the Health Care sector, while the Materials sector was the worst performing sector of the week followed by the Energy sector. The Consumer Staples is the most overvalued sector now, followed by Financial sector; while Tobacco Products Other, Regional-Mid-Atlantic Banks, and Dairy Products are the most overvalued industries. The Basic Materials is the most oversold sector, followed by Conglomerates sector, while Processing Systems/Prods, Metals Fabrication, and Aluminum industries are among the most oversold industries

Bear market statistics (19 during the last 100 years)

Description Average Current Worst Mildest Time from the end of one bear market to the beginning of the next 45.3 months 60 months N/A N/A Length of a bear market 18.5 months 12 months 47 month (ended in 1949) 2 month (ended in 1987) Bear market decline 36% 28% 89% (ended in 1932) 21% (ended in 1990)

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. The price retested the neckline and has resumed the long-term downtrend. The pattern should be close to completion, but the price did not reach the target yet. The sharp price drop moved daily William's Percentage Range (W%R) into oversold area, while weekly W%R is strongly oversold. The oversold W%R is usually considered as an early warning indicator that signals exhaustion of the sharp down trend and predicts that it may slow down and reverse soon.

Dow Jones Industrial Average - Long-Term Trend

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. The chart is forming a falling channel pattern. The support line is around 1140. The third wave down is in progress now. It has started on 5/19/2008 and it is now forming a sub wave three down as well. According to this wave count, the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure. Daily Lane's Stochastic indicator is oversold, while daily and weekly William's Percentage Ranges are strongly oversold. Other technical indicators might be in oversold area soon. The sub wave three might be close to completion within several weeks.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index was in a long-term uptrend since 2002. As we suggested previously, the price was forming a symmetric triangle chart pattern. A triangle pattern usually represents an area of indecision, where the direction of the movement is questioned. In a mature trend a triangle chart pattern usually appears as a reversal formation. Recently the triangle pattern had a sharp breakdown with noticeable increase in volume. The price target for a triangle pattern is usually derived by measuring the distance between the starting high point of the ascending triangle with the starting low point of the triangle, which is then projected downward from the breakpoint.

Nasdaq Composite Index - Long-Term Trend

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