S&P500: Shake ‘n Bake Baby!

The markets were down significantly in the morning and overnight with the Futures hitting as low as 2883… Surprised?!? Rally off the December low over?!? Well, to answer the first question: For my premium members today is really no surprise at all. Why? Well, I can’t claim I get it always right, NOBODY can, but in this case it’s all going as planned both in time and price. Here’s a quick run down memory lane: In my May 1 Premium Member Major Market’s update I forecasted:

“… Since minor-2 was IMHO a flat, this correction should be a zig zag and target ideally around SPX2885+/-5p. Minute-a is now underway and should find support at around SPX2910+/-5p, then a minute-b rally/oversold bounce to ideally SPX2935-2945 before minute-c takes price down to the ideal target zone of SPX2885+/-5p. At those levels 2=4 and price will then be right at lower (dashed green) trendline support (around Tuesday next week: Turn around Tuesday!?). Minor-4 could go as low as SPX2865, but if price goes any lower then it means SPX2954 was all she wrote for this rally off the December lows. Hence, one has a nice stop loss level here. “

For a limited time get the first two months for the price of one. That’s 50% off! Don’t wait, take advantage now, this offer will expire soon.

So what did we get right: Minute-a bottomed at SPX2901. Off by 4p. Minute-b topped at SPX2948. Off by 3p. Minute-c (so far) bottomed at SPX2894. Off by 4p. Does it get any more accurate and reliable then this? In addition, so far each day since last Wednesday was forecasted correct: Thursday red, Friday green, Monday red. Can we get a turnaround Tuesday?! So far that’s 3 out of 4!

To answer the second question: Although cash can still try to reach SPX2885, the current bounce off this mornings low is now so large it makes another +50p move down as we saw this morning IMHO much less likely. That’s what the Bears would like to see, but is seldom happens. Instead, the most likely option is, what I have labeled here as, minor-4 bottomed at today’s low and minor-5 to ideally SPX3030+/-10p is underway to then complete the rally off the December lows. This minor-5 wave should subdivide into five smaller minute-waves: i, ii, iii, iv, v. As long as price remains above SPX2885 there’s really nothing to worry about for the Bulls, while the Bears really need to still see a move below SPX2865 from current levels to tell us the rally off the December lows has ended. Until that happens; today was simple another “Shake ‘n Bake Baby“.

EDIT ON 5/7: Well, the bears did get their (wet) dream finally come true and got another 57p down today. BUT price has now reached SPX2885, in fact it just bottomed at SPX2881 and reversed, while VIX is up a whopping 30% but market breadth is barely botching (1 minute TICK chart has only a few -800 peaks). Thus there’s now a lot of fear in the markets; from which a meaning full bottom can build. From an Elliott wave perspective we now have what can be counted as a double zig-zag lower from the SPX2954 ATH: 2900-2948-2898-2938-2881(?) which I would label as minute-a, b, micro-a,b,c to complete minute-c of minor-4.

For a limited time get the first two months for the price of one. That’s 50% off! Don’t wait, take advantage now, this offer will expire soon.

Trade safe!

Arnout, Ph.D.

Founder and President Intelligent Investing, LLC

Vice President NorthPost Partners, LP

Leave a Reply