While the trend is still up, here's a multi-year chart showing significant resistance ahead for the SPX.
"Wave 1 = Wave 5" is a common relationship. Counting the 5 waves from the July lows, this gives us a target around 1295. Also note that price is approaching the upper trendline. We already talked about the very overbought oscillators and extreme bullish sentiment.
Trying to trade a top or bottom can be a deadly exercise. The more prudent approach would be to wait for a significant trendline break, before taking action with a suitable stop. All the best!
S& P500 Short-Term: Bearish Wedge
Not to swing at every pitch requires a lot of discipline. If one takes only the best setups, with a safety margin, one can't go too far wrong. (Sounds like value investing, doesn't it?!) The S& P500 maybe providing a short-term bearish opportunity.
My last update noted a trendline break with support at 1300, and suggested that we might see a shorting opportunity. Since then prices have whip-sawed impressively, and failing at the back-test of the broken trendline. Thus resulting is what could be a bearish Rising Wedge, as shown on this 30-min chart.
Top of the wedge is at 1332, bottom is the rising trendline. A break eitherway could be bullish/bearish. But Elliott Wave Theory suggests that after an impulsive decline and a corrective upmove, there should follow at least another impulsive decline.
Strategy:
1. Taking a short-position at the top of the wedge, with RSI close to 70 on the 30-min chart(for margin of safety), with a suitable stop just above. In case of decline below the lower trendline, looking at a target of around 1275.
2. In case of a break above the wedge, i won't be taking any long positions until clear of recent highs.
http://trendlines618.blogspot.com/2011/03/s-short-term-bearish-wedge.html