Now for Post-FOMC Action

Even with the excitement generated by the FOMC, the two factors I have been discussing over the past few days once again came into play. The market saw resistance in the form of both a tight cluster of Fibonacci ratios related to the “a” and “b” waves of the current zigzag; and, the old “0-b” trendline drawn across the October and December 2007 highs.

However, we must still wait for confirmation that the zigzag pattern is complete. And after the zigzag? The wave principle allows for two scenarios: An “x” wave or another corrective pattern. The former would not see the market decline below 1324 while the latter could retrace the move up from March 17 almost completely.

My next post will be in about a week.

An Old Trendline Still Kicking

The cash S&P500 put in a downtrending bar on its daily chart yesterday. Is the a-b-c zigzag pattern from the March low complete? I don’t know yet. At this time we still have to wait for a break below 1369.84 for confirmation.

Yesterday I showed that the market had run into a tight cluster of Fibonacci ratios related to the “a” and “b” waves of the current zigzag. Today I want to point out that the old “0-b” trendline drawn across the October and December 2007 highs is still operative. A reaction to such an “old” trendline strengthens my conviction in the count.
Timing. Yesterday I stated that the zigzag does not have to be complete until May 7. It can complete earlier. Last Friday I said “I can foresee a choppy, but overall upwards move in the S&P500 that lasts at least into the Autumn and perhaps into 2009.” More specifically, the upward move that began March 17, 2008 will not peak until at least the first week of September. We will once again have to be on guard this year for an October swoon.

Will a Zigzag Complete in Conjunction with the Fed Meeting?

The cash S&P500 has been slowly working its way upward over the past couple of sessions in what I believe to be the “c” wave of an
a-b-c zigzag pattern. We will know the zigzag is complete if we break below 1369.84.

Today’s chart also has a tight cluster of Fibonacci ratios related to the a and b waves of the current zigzag. For instance, if wave c = 2.236 times wave b then wave c would end at 1403.3. We made high yesterday at 1402.9. Once wave c ends we should drop rather quickly below the “0-b” trendline shown in orange. Of course the zigzag does not have to be complete until May 7.