S&P 500: Potential Ending Diagonal Triangle

On 1st April, when the S&P500 index was at 797, I suggested that we will get  a move to just short of 850 but that will be about where the rally will fail. After reaching 845 on 2nd April, the market has been gently easing lower. The analysis done on 1st April used the daily chart. When we look at the hourly chart, we get some additional clues. The most important clue is that all moves from the low of 766 to the high of 845 has been 3-wave affairs. We already know (or think we know) that the index is in the fifth wave of the recovery from 666.  When we see a move unfolding in ‘threes’ at the fifth wave position, we should start looking for a diagonal traingle, which is  a very profitable setup. With this heavy technical stuff, you will be able to make better sense of the attached chart. Enjoy.

PS:  If you don’t like the technical speak, don’t be too worried. I invariably include enough non-technical comments to make it clear where I think the market is going.

S&P500 hourly chart: Potential Diagonal Triangle?
S&P500 hourly chart: Potential Diagonal Triangle?

Related S&P500 links:

Was that the stock market bottom?
SNP500 revisited
S&P500 and Citi

Fifth wave extensions can make you rich!

What is a significant rally in the stock markets?

Harmony in markets: S&P500

Ending Diagonal Triangle in S&P500?

S&P500 Elliott Wave update

S&P500 index: is a top already in?

S&P 500 update: where is the top?

S&P500 continues its rally

S&P500 remains resilient

S&P500 ready to dive?

S&P500 Update: May 19, 2009

S&P500 Elliott Wave update:21 May 2009

S&P 500 breaks higher: update 2 June 2009

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    1. Hello Donna,
      Thank you for your comment. I think we are going to see some back-and-forth moves around here before the sell off. Please see today’s post. Best wishes.

  1. this is playing out nicely… looks like 756 is inevitable…

    looking more at the longer term view, where do you think we are in the elliott cycle?

    I’m thinking mid March till early late April is a wave 1 on a daily/weekly chart and the target of 756 (testing the previous bottom of 666) is a wave 2… i.e. wave 3 is just around the corner with at least a 33% movement up to at least 1,000 in the months ahead.

    What are your thoughts on this?

  2. Hello Yong-Long,

    It is reasonable to expect another sharp recovery once we have corrected down to 756 (or lower). The main reason is we have just finished a 5-wave move. Whether the next rally is a 3rd wave or a ‘c’ wave need not bother us just yet. Suffice to know that that move, when it happens, will be steeper, and swifter than the rally from 666 to 875. Ramki

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