Clear Bearish Elliott Wave Pattern

The 05/12/21 blog “The First Downside Target For US Stocks” noted that the S&P 500 (SPX) decline from the 05/07/21 peak appeared to be an Elliott five-wave impulse pattern. The rally on 05/13/21 confirmed the impulse wave was complete.

The 30-minute SPX chart courtesy of Trading View illustrates the intraday action.

The 30-minute SPX chart courtesy of Trading View illustrates the intraday action.

The subsequent rally was a clear three – wave  Elliott pattern, specifically a Single Zigzag. This is a corrective pattern of the main trend, which in this case is down. The Zigzag pattern topped just above a .382 retrace of the prior decline. The .382 Fibonacci retracement level frequently become resistance/support.

Also note the Stochastic bearish line crossover, soon after the high of 05/13/21.

Traders are short 50% non-leveraged SPX related funds from SPX 4170, and short 50% non-leveraged SPX related funds from SPX 4135.

Short 25% non-leverages SPX funds on an SPX  move below 4087.20 – the “b” wave low.

Use a move above SPX 4207.93 as a stop loss for the 25% position.

Cancel this short recommendation if the SPX opens the 05/14/21 session above 4135.00.