October 30th, 2009 by 
Yesterday I posted a stock market update using the S&P 500 and included a chart with some patterns identified.
The levels I mentioned in that post have been violated to the downside, with considerable volume and Advance/Decline Issues currently near 25%/75%.
I mentioned that “As the current position of the S&P 500 displayed on the daily chart above evolves, any considerable move, and close, back lower through yesterdays low of 1042.19 could easily be interpreted as 5 waves down from the recent market top.”
I then went and mentioned that “This would not be the same as the previous 3 lows on the chart which had 3 waves down. Instead, this would raise the odds that a next larger degree trend change was underway, down.”
Now what? Barring any overly optimistic bounce into the close today, any close at or below the current level would increase the odds that a major trend reversal in under way.
As a clear 5 wave pattern is unfolding to the downside, the next thing to consider is how far the current leg will continue. There are several different wave patterns that can evolve and there is no better time than now to learn more about Elliott Wave patterns by accessing your own Basic Tutorial: 10 lessons on The Elliott Wave Principle for free, and learn how to use this valuable tool in your own trading and investing.
Here’s a great Technical Analysis Handbook that will provide further information on using Elliott Wave Analysis to help you navigate the current market positioning:
Here’s an updated chart after the market close today showing the S&P 500 closing at 1036.19, below the prior trend line support level and below the recent low from 2 days ago.
After the market closed yesterday I heard comments that the move higher was the biggest one day advance in 3 months. Today, comments were just the opposite, even worse- “the decline was the biggest one day decline in over 6 months”. Where did all the optimism go after yesterday’s GDP report?
