November 9th, 2009 by 
Here’s an S&P 500 update analysis through the end of the trading day today.
On my last post I mentioned to be on the lookout for a possible Head and Shoulders pattern in the stock market forming, specifically the S&P 500. Today’s large move higher put’s the odds of this pattern happening at risk.
I mentioned in the previous post that volume appeared low for any significant move higher and today’s move had a little more volume than the last few sessions, but nothing to write home about. It still seems suspect, but if the market wants to move higher, none of us are big enough to slow it down as a whole.
For the head and shoulders pattern to still work, the S&P 500 will have to start moving lower sometime tomorrow morning and not look back. If it doesn’t, the next pattern to be on the lookout for would be a Double Top.
Looking at the updated chart below, the next area of possible resistance, and the area to help form the possible double top, would be near 1100. I feel this also is now providing a strong “round number” attraction since we are so close. So even if the market moved lower tomorrow morning, I would expect a pop to this area first before the reversal.
The other thing to keep in mind is that if you use any form of Elliott Wave analysis, the move higher today burst up through the bottom of the previous 1st wave lower near 1073 which is also nicely coincides with the 61.8% Fibonacci retracement level as seen on the chart above.
I’m not positive right now, but I believe this move up through the prior 1st wave down is one of the rules that cannot be broken for a downtrend confirmation to be in effect. I will check my Elliott Wave Principle book and add my findings to the next post. (I’m writing this BEFORE I read my Elliott Wave Paid Subscription service as I cannot and will not provide other peoples copyrighted analysis. When I write any analysis on my site it is my own, based on what I have learned myself. See below for more information to learn about Elliott Wave analysis and their expert forecasting services.)
The other possibility I see is that a triangle is forming. Usually triangles form before a final thrust to the end of a larger degree trend but I have seen on occasion a triangle form at the top itself. There are also several different types of possible triangles to be aware of. I will try and research more over the weekend and add an updated post of further possibilities.
So basically we will have to look for a move lower almost immediately tomorrow first, if not then a possible double top. If we move higher and close above 100, then the odds will increase that higher levels are in store before a major top is in place.
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