Sell Signal on SP500 Monthly Chart?

Jul 2, 2009: 11:20 AM CST

June’s monthly candle closed with a ‘doji’ at Fibonacci resistance – that’s a bearish development as we start the new month of July.  Let’s take  a look at the S&P 500 monthly chart to see its current structure.

We see the S&P 500 is still below levels from 1998 – in fact, price recently came into the 950 level which was prior support in late 1998 (and for the September spike-down in 2001).

Most importantly, we have come into the 38.2% Fibonacci resistance level of the May 2008 highs to the March 2009 lows – virtually to the point.

In combination with that, we have a bearish doji candle formation at overhead resistance – and as of June 2nd, we have a down-candle.

Don’t put so much emphasis on the two trading days in July as equal to the full months the other candles represent – but it’s telling.

If price continues in the direction it appears to be traveling (down), then we will have a confirmed reversal/retracement down off the 950 highs in mid-June.

The above chart shows a simplified version of the current S&P 500 structure.

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Corey Rosenbloom, CMT
Afraid to Trade.com

11 Comments

11 Responses to “Sell Signal on SP500 Monthly Chart?”

  1. Vol Says:

    i think others have pointed this out but it is downright ridiculous when you notice how the plunge from the all-time highs to the current 52-week low looks like wave 1 of 5, in elliot terms. so that would mean we are in wave-2 correction mode to the upside.

    scary stuff. very scary.

  2. Corey Rosenbloom, CMT Says:

    There's a couple of ways to interpret the 5-waves.

    The 'bullish' count is that we've completed a full 5-wave impulse of the C wave down and are beginning a New Bull Market. That's quite optimistic.

    I'm of the opinion we completed wave 4 of 5 up here and are going down to finish up 5 down of C which could truncate at 666 or slip just beneath it perhaps to 600 or even 550.

    Can't see how this is just Primary 1 of Cycle C though personally – though yes it is an interpretation.

  3. Mike Says:

    Cory, how could we have completed the full 5-wave impulse of the C wave down ( your Bull case ) when your analysis of June 19th (“Large Scale Monthly Elliott Wave Chart of SP500”) has still yet to be completed with a 5th wave to the downside???

  4. Corey Rosenbloom, CMT Says:

    It pays to keep an open mind – there are respected technicians who are calling this move the first swing up in a new bull market. The Elliott count allows this possibility, though I'm not on board yet. It would assume the final primary 5th wave would be too small in my opinion.

  5. Vol Says:

    i think others have pointed this out but it is downright ridiculous when you notice how the plunge from the all-time highs to the current 52-week low looks like wave 1 of 5, in elliot terms. so that would mean we are in wave-2 correction mode to the upside.

    scary stuff. very scary.

  6. Corey Rosenbloom, CMT Says:

    There's a couple of ways to interpret the 5-waves.

    The 'bullish' count is that we've completed a full 5-wave impulse of the C wave down and are beginning a New Bull Market. That's quite optimistic.

    I'm of the opinion we completed wave 4 of 5 up here and are going down to finish up 5 down of C which could truncate at 666 or slip just beneath it perhaps to 600 or even 550.

    Can't see how this is just Primary 1 of Cycle C though personally – though yes it is an interpretation.

  7. Mike Says:

    Cory, how could we have completed the full 5-wave impulse of the C wave down ( your Bull case ) when your analysis of June 19th (“Large Scale Monthly Elliott Wave Chart of SP500”) has still yet to be completed with a 5th wave to the downside???

  8. Corey Rosenbloom, CMT Says:

    It pays to keep an open mind – there are respected technicians who are calling this move the first swing up in a new bull market. The Elliott count allows this possibility, though I'm not on board yet. It would assume the final primary 5th wave would be too small in my opinion.

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