Detailed Market Analysis (Mid 02/11) - Part 1

We are finally around mid February 2011. Market continued to march higher over the last 1.5 months, since we went long. At this point in time, I would like to analyze the market in detail from Elliott Wave, Sentiment, Cycle, Models and Technical Indicator perspective. This study will be culminated with a detailed trading plan in conjunction with the Market Matrix.

Elliott Wave Analysis of SP500:

The first chart on the left is a daily SP500 chart since early the start of 2010. According to this charts, after a decent decline in May - June 2010 time frame,  market has been going up for the last 6 months. Interestingly, market has traced out a clear 5 wave structure, which normally should lead to a pull back to around 1170-1190 area. 

Second chart is the horly chart from the November 2010 low of SP500. This chart also sports a clear 5-wave structure, which mean that the market's rally is nearing a termination point.

Finally, the third chart shows 15 min SP500 data. This chart also clearly demarcates a 5 wave rise since late January 2011 low. According to this count, market should not rise above 1341.

Conclusion: 

Cumulatively this analysis suggests that market is approaching a turning point or at least the current wave structure fits the definition of a completed Elliott Wave structure for a rise. However, a completed wave structure does not guarantee price decline. Therefore, over the next few days, we will discuss the Elliott Wave structure of Financial, Nasdaq and Treasury bonds to further understand the current market situation.