The S&P 500 made an intraday high on Wednesday, May 9 of 1513.80. If you go back to my post on April 29, you might see mention of that exact number as a potential source of resistance to our upward movement. For whatever reason, this appears to have proven correct.
We have now entered into what I consider to be Wave 4 of the wave up from March 14. You can get a fairly good representation of this interpretation by viewing the weekly chart I posted on April 30. The only real requirement for this interpretation to be valid is that we close tomorrow below 1505.62 on the S&P 500. This was where that index closed on Friday, May 4.
Our next challenge is to determine how low our current decline will go. Elliott Wave Theory tells us that it is not uncommon for a correction to retrace back to the area of Wave 4. It would not be unreasonable to assume that the low set on May 1 was the low of Wave 4. This suggests that the S&P 500 could continue down to the 1476.70 level.
This level becomes increasingly intriguing when we look at things from the perspective of Fibonacci ratios. Let us assume that the low of Wave 3 was 1412.54 set on March 30, and the high of Wave 3 was the 1513.80 high set on May 9. This gives the total wave a length of 104.90 points. A 38.2% retracement of this wave would be 40.07 points. This would place the S&P 500 at 1473.73.
This gives us two different methodologies within the principles of Elliott Wave analysis that both point to the level around 1475 as potentially significant support. I would view this as our primary target for this decline of the S&P 500.
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