Since our 2012 technical forecast was issued earlier this year, S&P prices have closed right at key resistance of 1292. Apart from the further maturation of the current rally, not much else has changed.
Figure 1 below divides intermediate Elliot Waves into sub-waves in order to illustrate further the maturity of the current rally:
Intermediate Wave 1 down, shown with black dotted line, consisted of five sub-waves (i) through (v), each of which is depicted with a red dotted line
Note that sub-wave (iii) down was the largest in magnitude
Countertrend rallies consist of three-wave movements, in this case shown as A through C, and depicted with blue dotted lines
Sub-wave C can be further subdivided into 5 smaller waves (not shown)
It would appear that the S&P is completing the fifth of five sub-waves within wave C of intermediate Wave 2. Note that daily stochastics are overbought at 94% and that S&P prices closed right at key resistance of 1292.
Once this move is complete, Intermediate Wave 3 down should begin. According to Elliot Wave theory, the magnitude of this wave will exceed that of Wave 1 down, which featured a 300 point drop.
I believe investors should consider taking trading profits from this recent rally to avoid the coming “stock-apocalypse.”
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