On our way downwards

In the latest market review we posted on April 12th 2011 we forecasted: ” We are now very close to the probable time and price target.., and we will definitely experience quite some resistance.. , …with a likely price target of 1352 on the S&P500 +-20 points…, ..most likely price target of 1358.55.., ..and a mid-term turning point any time from now(april 12th) and end of May 2011..; in picture shown April 29th +- 1 month as the likely time target. We were right, and we were on our way downwards in all the major stock market indices since the time and price target mentioned in the late april forecast.

We were ten very carefull in our time forecast given the wide range mentioned for a crest to occur. Tops can be difficult to forecast. In hindsight our forecast nailed down the high on the S&P500 exactly at April 29th. Notice that the top at 29th april was the highest close of the year) at 1363.61, only 5 points away from our  predicted most likely price target of 1358.55

At major support level

On the S&P500 we now arrived at the 21 month moving average, around the 23.6% retracement of the last leg up, as well as on the next Gann angle that connects the bottom of 2002(lowest close) with the current market price.

SP500 Market Position August 4 2011

The current level we are now on could form some intermediate support, but there is a good change the market will continue downwards after some retracement in the next few weeks to come to the 50% retracement levels or even more.  However, expect the unexpected. The market is currently very volatile, with wide swings, so don’t try to catch a falling knife. Wait for confirmation and the stock market to settle down first.

The odds are declining for a bull market to continue

We have made quite a tumble from the top of the bull market. The top for the S&P500 made on April 29th 2011  could well be a final crest in the current bull market but not necessarily. It is still too early to call. We could well be in a corrective wave, possibly a Elliott Wave 4 of some degree.  However the odds that the bull market will continue is rapidly declining.

We are now at the 21 month moving average support. If we fall through for two months at a row most likely this will likely confirm the crest has been set and we have started a new bear market. For the S&P500 the 21 month moving average is now approx. at 1201 in price and the current market price at 1199.38.

Due to all the other reasons mentioned in the above picture, on the Gann angles and Fibonacci relationships, the top of April 2011 in most markets is a major top, not likely to get passed easily.

Don’t miss the next turn

We sure have a fair idea where the market is heading in price and time in the coming months and years. Stay tuned.

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Tags: Cycle analysis, Delta phenomenon, Fibonacci, Gann, Market Timing, S&P 500, Stock Market, Technical analysis