A broken security key on the table.

Impulsive break – S&P 500 chart update

Previously we had discussed the key support of 2,085 on the S&P500, and 208.78 on the SPY ETF, which was broken on Friday. Then prices tested resistance and confirmed the bear breakdown during Monday’s session. Prices have broken the level that divided the bull and bear scenarios, and so it’s now resistance.

Tuesday’s drop through the new trend’s base channel (blue) support made the case for an impulsive decline. Please, be alert with your short positions though. We are at a very early stage of the bear phase where rallies will be wild and high against the budding down trend, especially after reaching the current decline’s optimum target at SPX 2,026. Anyway, until the January low is taken out, we have no evidence of a large multi-month degree sell-off.

Amidst the correction of this first bear leg, the previously mentioned SPX resistance of 2,085 will be very easily attainable over the course of the next two weeks.

The S&P500 index bar chart with the latest Elliott Wave labels

Special: If you’d like to see our friends at Elliott Wave International’s interpretation, please visit their open house. Their Pro Services stock market analysis is temporarily available until Tuesday.

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About Laszlo Nagyferenczi

Laszlo Nagyferenczi is a day trader, analyst and instructor as well as the creator of the proprietary Context-Momentum-Signal concept. He has authored over 200 blog articles about his unique approach to trading and the Elliott Wave Theory. His clients appreciate his ability to go from the theoretical to the practical i.e. all the way to the actual trade set ups.

Originally hailing from Hungary, Laszlo is fluent in English and Hungarian with a long list of education credentials including BA in Economics, Certified Elliott Wave Analyst (CEWA), Certified Adult Educator for T-Groups, Professional Co-Active Coach (PCC) at CTI. The real education, though, has been the trial by fire in the markets, with real capital at risk.

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