The SP500 Index (SPX) corrected after six days without a move below the low of the previous day. A move back toward the 20 day moving average is expected. Volume was lower today than yesterday and all days last week.
The Nasdaq 100 (NDX) has a similar chart. The 50 day moving average will likely serve as resistance on the first attempt to break through (assuming price continues up).
News after the bells was that Cisco Systems (CSCO) would not hit revenue estimates this current quarter. Price is down after hours. A place to watch for a bounce (assuming this news was already in the stock) will be at the 75% price retrace level. Below that, the 1×1 ascending Gann angle should complete this A-B-C correction of the 2002-2007 range.
Charts courtesy of Stockcharts.com
Tags: A-B-C Correction · CSCO · Nasdaq Charts · Price Retrace · Standard and Poor's 500 (SP500) · Volume6 Comments
6 responses so far ↓
Andy
great site — am now reading regularly to decide if premium service is good for me.
question about today’s drop — I am assuming from your analysis that S and P and NDX 100 should bounce off 20 DMA and head back up to 50 DMA. if prices close below 20 DMA tomorrow would that be a sell signal? where is next resistance below that?
Also–I found your site through your 10/25 analysis of the 29 stock market vs the nasdaq which I have been using as a guide for weeks (well I was relying on the S and P actually but your Nasdaq commentary was compelling)
Would a significant drop here invalidate the use of the 29 model as a roadmap? There is no similar drop back towards the lows after the 2nd major reversal in either 29 (which was my S and P roadmap) or in ‘38 best I can tell from your chart — I use TOS and they don’t have the ability to go back that far to try to create my own chart.
any comments on the ST and intermediate outlook for S and P and also in the context of the ‘29 roadmap would be greatly appreicated.
looking forward to being a regular reader–hope you keep frequent posts coming as regular guidance really calms the nerves!
almost44 - I am glad you find the site useful. As for the 20dma, I never “expect” anything to happen. I sometimes “guess” something will happen but I don’t bet huge amounts of money on “guesses” The market is a game of probabilities and historical patterns. The 20dma often will provide support of a strong short term market. If it does, this tells us the market is strong to the upside (lots of buyers of dips). If it doesn’t provide support then it tells us the market is not in a strong uptrend. Decisions should be made on what actually happens and not what “could” happen. At this point we don’t know. But the market’s action will tell us because it always does the same thing when it wants to go up.
As for the 1929 roadmap, this is a guide and not an absolute. As long as price is following the guide then it is useful. When price diverges from the guide, (as it will eventually), then we stop using it. If you look at the day to day comparison then it doesn’t match at all. But the cycles are more useful. As an abstract example, suppose move “a” took 25 weeks in 1929. Price today is moving similar to move “a”. So we can “watch” for a change at 25 weeksas price changed in 1929. This works surprisingly well but is not an absolute. Maybe price today goes 27 weeks and steals two weeks from the next segment of the move. Then we add up all the segments and watch the combined segment of time. The game is all about adding an edge that is easily available but almost totally ignored by the rest of the world. Even many of those who try to use the edge ruin it be injecting their own “ideas” onto a simple map.
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For example, you can look at a roadmap and see that your destination is east of your current position. You can just say you are going east. But examining the map closely you will see that there are short periods where you are actually going north, west, and south. While driving, our mind does not get distracted and force us to lose the true destination. But in the market, it is very easy for people to forget we are headed east. A large number of traders spend to much time trying to figure out the short moves north, west, and south, They waste a lot energy and don’t make as much money than it they realized the destination was actually east.
Morning all, took charts to work with me Andy, what do you think of a Head and Shoulders forming? Well, the Brits have just got to love that move by their fed…., anyway, All of my long term says we are going up, that is what is confusing me, so finally broke most of it down, and thats what it looks like and its in a ton of other stocks not just S&P. OK have a good day, gotta get some rest…. and glad to see a newby in the comment section….welcome Almost 44….Everyone happy Trading!.
Libby - I certainly don’t think we are in a “Mr Happy” market. Newz sucks. Is it priced in enough to allow a bounce back above 1100 SPX? Not sure but today will be a good tell. H&S? Not sure, but so far I like the bottom pattern - no matter what it is called.
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Now I have to go to work. Back tonight…
Sorry Andy, Most people hate me right now, I am a bear at heart. I blame Elliot Wave International for that. Prechter and Hotchberg, are like the most negative men on Wall Street that I know. I told ya I had to quit their site because they where always wrong for so long, but now, they are right on the $. Have you ever read Conquer The Crash by Prechter? It really has prepared me for what is going on right now. Don’t think that I have not taken a hit with this Plunge!…I have, but I have been able to get in and out of certain funds to save my hide, where most people are just sitting back complaining, I tell them to get off their A– and find out how they can save their investments. I loose sleep daily because I am now in charge of my investments and not some bank who doesn’t give a rats butt if I have a dime left in my pocket. I got home at 6am this morning and got to bed at 8am, its 1pm and I am up checking out my investments, wondering if I should close out my puts and bear funds because I see a possible inverse head and shoulders,(which is bullish) I have to go back to bed because I have to be back at work at 6pm. Yep it Sucks, but I hope you had a good day at work, and I am sorry, the market sucks, but you have to realize we are in a bear market, so you have to trade to the bear side to make $ now, its hard changing your psychy to the “Dark Side”, as I tell a friend that I have tried to teach the Elliot wave too and he just can’t get it, no matter how hard I try. He is a fundamentalist at heart, a bull, but we have all been trained to only look up, now its time to look down the hill, remember when you go sledding with the kids, how fast you travel going down hill, the same theory applies to bear markets. I was a teacher a long time ago Andy, not for long, so I am always trying to teach, and learn, like I told him, when I got thru sledding I hurt alot, usually fell off somewhere down the hill, got a good bruise, but I learned the next time I went down, be careful, watch out for the bumps, and I usually made it down with out a bruise , same thing applies with this market, you have to watch out going down the hill, it moves fast, yes you jump out too soon, ouch that hurts, you climb back on and next thing you know she’s gooing up, then down, up then down and faster and harder this time. Much like Life but what a good ride it can be both ways if you can learn to think that way. Be One with the Mountain(wave) and you will find your way up or down, young jedi, is what my mentor used to tell me,,,, warrior stuff…LOL! Be Happy Andy, take the kids for a walk, soon you’ll have them out sledding….