New Roadmap Still Points to Move Below 666

What a bullish day! With 804.3 broken we must conclude that the move down from Jan. 6, 2009 to the low on March 6, 2009 was a complete zigzag pattern. This triggers our alternate Elliott roadmap while keeping the view that we get a new low (below 666) before a potentially large multi-month rally can unfold in equities. Today’s chart shows that a large Expanded Flat pattern may be unfolding from the November 2008 low.

Under this scenario the cash S&P500 can’t move above 877.86. If it does it will imply that the low of the year is in and that the market has started a large fourth wave rally that will last into early 2010.

Next resistance can be found at 826-839 where both Fibonacci confluence and a Gann 180 degree up target exist. Two technical items to watch over the next few sessions: 1) The volume yesterday was lower than it has been in a few days and 2) The composite indicator fell while the RSI rose; setting up a possible negative divergence. Both of these developments indicate forthcoming weakness.