S&P 500 Daily (Non-Log) With 200 day EMA

A few weeks ago, we emphasized the idea that there was nothing bearish looking about the S&P 500. While the overall wave
count was a mystery (and still is), several other technicals suggested nothing other than being long or neutral. As the market
levitates closer to the next zone of major resistance, the risk/reward shits away from being short term bullish to being at least
neutral. The market began the serious “panic” phase of it’s decline back on 9/22/08 in the price zone of 11781254. The
market will have memory of this date and those price levels. With the 61.8% retrace of the entire decline at 1229, it’s a pretty
safe prediction to suggest that the low 1200’s will be EXTRAORDINARY resistance. So, the question for S&P bulls/longs is
this: Do you risk an inevitable 10-15% correction in order to squeeze the last 4-5% out of this move?

Wide Spread Panic

Began Here

Though I’m not a big believer in moving averages,

the 200 day Exponential Moving Average has
proven to be a very important indicator. Using this
line, longer term bulls have no issues until the
market decisively breaks this EMA.

Andy’s Technical Commentary__________________________________________________________________________________________________

 Those who have followed my commentaries the last several months know that I’ve openly struggled to identify the wave
structure from the March ’09 lows. One of the Wave Theory “gurus” that I subscribe to when I’m “lost” with a count is
Glenn Neely. His last few updates have provided no answers until his most recent conclusion. Here’s what he had to
say: “The recent run to new highs makes it impossible to begin any known Elliott or NEoWave structure from
the March 2009 low.” In an odd way, that line actual made me feel a little better as a wave counter--one of the leaders
in the field of Wave Theory confirmed what I had been concluding for awhile now, that the move off the lows was very
unusual and difficult to categorize. Indeed!

<B> S&P 500 Weekly (Non-Log)

-B-
(Y)

“d”

( W ) “b”
“e”

“e”
“c”
“c” “a” (X)
Using my own symbology, this is the type of model that “a”
Gleen Neely has developed to describe the price action.
He finishes the initial -A- wave down at the Nov ’08 lows
and begins the move with a “triangle” which was followed
by an expanding triangle (X)-wave. I’m not a believer in
this count, but it should be noted that the triangle up from
“d”
the Nov ’08 low was a model he introduced back in July of
2009 when 956 was taken out. So, in some respects, this
is the same count he’s had for several months, though he
never could have anticipated an (X)-wave to follow the
triangle.
-A-

“b”

Andy’s Technical Commentary__________________________________________________________________________________________________

 I’ve long thought that this entire complex
correction would finish in a triangle. Maybe
it will look something like this?
“Ultra-Complex” Corrections??
(Y) “a”? (Z)
“c”?
“z” “e”?
c
“y” a
a c
“w”
c “d”?
“x” b
“b”?

a b (X)
(W)
“y” “x”
b
c
a

“w”
c
b
(X)
“x”
a
Neely’s model on the previous page is interesting and actually does a decent job of explaining most
of the price action, but I don’t like ending the move down at the Nov ’08 lows. It doesn’t fit my larger
b preferred count and it also just “felt” like Mar ’09 was the “better” low in the sense that there was
extreme despair and “resignation” as it appeared the entire banking sector was about to be
nationalized. Thus, I’m more convinced that we’re just witnessing “something different,” some sort
of new formation that has been brought on by the introduction of a “new” and extremely large player
in the capital markets: The Fed’s Quantitative Easing Program.

667
-W-

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (180 min.)
Please note that this is modeling the June S&P futures. This is my preferred
case--it would be bullish in the very short term as it targets the low 1200’s. When -b-
-d-
the “thrust” is completed in the next few weeks, it should conclude the pattern up
from the mid-February lows and set the stage for a 10-15% correction. Sell in
May and Go Away? a
-e-
-c- b
“w”
(Y) c
b -5-
-a-

“x” This looks like an “irregular” triangle, and it

appears the “thrust” began with Friday’s lows.
-3-
a
a

“x” -1- -4-

b

-2-

c d
b
“w”

a
e There is a short term bearish case on the next page…
“y”
(X)
c

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (180 min.)
e
This would have to be the bearish interpretation-- that we’re finishing this “double”
with a type of triangle. If this is what is transpiring, we should get a fairly dramatic c
collapse in the next couple of days. Short term bulls need to pay attention the b-d
uptrend line…
a

d
“w”
(Y) c
b -5-
b

“x”
Very important trend line for
short term bulls.
-3-
a
a

“x” -1- -4-

b

-2-

c d
b
“w”

a
e
“y”
(X)
c

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 June e-Minis ~ (60 min.)
So, to put these ideas into some kind of trading strategy: It appears that a “thrust” began at either 1170.25 or 1166.25, which
means those levels “should” be good support now. Additionally we have this uptrend line (blue dashed) which should also serve
as support to the short term bullish case. Therefore, it makes little sense to sell long positions or initiate shorts until 1166.25
gets take out to the downside. The same level on the Cash S&P chart would be 1167.

1170.25

1166.25

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 Weekly (Linear) - This Picture Looks Bullish
While the longer term Wave forecast remain bearish, the fact is this is short to medium term
picture looks bullish. The 89 day SMA (blue line) has been the one moving average we’ll
consider because it has been so good at confirming medium term trend reversals. It has been
broken decisively and appears to be “flattening” out now--this indicator looks bullish. The
downtrend line (green dashed) has been decisively broken, and was retested. Using classic
chart theory, this looks bullish. The pattern off the March lows does resemble a Head and
Shoulder bottom, even though the right shoulders seems a bit small. The target for this pattern
comes in around 1,235, so that is yet another bullish indicator.

Head & Shoulder

Target is ~ 1235

The “double top” is the only thing

bears can hang on to here.

Reprinted from 3/13/10

Right
There’s nothing about this picture that suggests Shoulder?
anything other than being bullish or neutral in the
short to medium term. In other words, there’s
nothing here that shouts: “Short Me.”
Left
Shoulder

Head

Andy’s Technical Commentary__________________________________________________________________________________________________

 “Ultra-Complex” Corrections??

All of the waves within (Y) here look “related”-- (Y)

they’re mostly similar in duration and complexity “z”
c
“y”
c a
a
“w”
I counted this move (W) as a “double” at the c
b
time, which is why I thought 957 was a “x”
medium term “peak.”
a (X)
(W) b
“y” “x”
c b
These two corrections were the most
a
significant we’ve witnessed. These are not
“impressive” corrections--they are short lived
“w” and shallow, the signature of x-waves
c
b
(X)
“x” Reprinted from 3/21/10
a

b “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
This brilliant phrase was uttered by Sherlock Holmes in The Sign of Four. Using “orthodox” counting techniques,
this is the wave count that best explains the price action from the March ’09 lows. Corrective moves, especially
B-Waves are the most difficult types of pattern to count because it’s nearly impossible to know when it might
conclude. This wave is no exception. In fact, this may be the most complex type of corrective pattern ever
witnessed in the sense that we’re witnessing Intermediate level (X) waves connecting “Complex” corrections.

667
-W-

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 ~ (60 min.)
It’s difficult to know exactly where the (X) wave concluded (either 1044 or 1068). This wave count higher has been my basic short term model
for a month now, though it has been “building” on itself in ways that were difficult to predict at the onset. Under this model of a “triple” higher,
the wave is now running out of time, but we should see one more wave higher. Under this bullish case for one more push, 1140 must hold.
This level corresponds with the termination of the last correction and is also the 23.6% retrace of the move up from 1044.

“z”?
b
a
(Y)
“z”
c
“y”
c
b
1140
“x” Short Term Support
a
“w”
c
b

“x” Reprinted from 3/21/10

a

1044
Long Term Support
(X)

Andy’s Technical Commentary__________________________________________________________________________________________________

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This report should not be interpreted as investment advice of any

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