φ A Medium-Term and Long-Term US Market Perspective
May 13th 2006
Overview
This market perspective is based on the Elliott Wave Principle and represents
a best estimate of the most probable future market direction. For more information regarding Elliott Wave
Principle please see our Elliott Wave International site review here.
Legend
—
Green Line
Trend
(5 waves)
—
Red Line
Correction
(3 waves)
º º
Green or Red Circle
Possible Wave
Terminus
♦
Green Diamond
Wave Terminus
♦
Red Diamond
Wave Terminus
→ →
Green or Red Arrow
Probable Market
Direction
Monthly Commentary May 13th 2006
The close below 1295 (at 1291 on 5/12/6)
indicates that Wave 5 of the uptrend that started at 1179 around the end of October 2005
terminated on 5/5/6 at 1325. This confirmed that we were right about the previous
monthly long position (mentioned in our 5/5/6 Market Perspective) being a poor reward:risk trade. For an aggressive early position we would be short at the open on 5/15/6 with
an initial trailing stop at 1312. A more conservative approach would be to wait for a close below
1285 as confirmation of the start of Wave A of the correction before entering a position.
Interim Update May 17th 2006
As anticipated on May 13th 2006, the S&P 500 moved down significantly to confirm the start of Wave A of a correction.
The close of 1270 today would be an excellent place to add to the short position we established on 5/15/6,
or to initiate one if you didn't enter then but waited for the given confirmation (of a close below 1285).
The current trailing stop for this new position would be at 1297.
Yearly Commentary May 13th 2006
On the yearly chart we are still long on 5/8/6 with
a price target of 1388 and an initial trailing stop at 1233.
This market perspective is for your information only. Please get professional
advice before risking money on trading or investing using this information. Note that the S&P 500 is a theoretical
index that cannot be directly traded.
