S&P500 (SPX.X) technical analysis for the near term

Here's my current technical analysis chart for the S&P500 (SPX.X) near-term, updated to include some key Fibonacci levels. (There are other Fibonacci levels but I didn't want to clutter up this chart too much - if you are intensively daytrading or swing trading over two or three days, you would want to include the .707 and .786 levels also, and consider the levels tied to other swing points as well.)

Note that price also received some support from the lower Bollinger Band, and the indicators showed price was oversold at the 817 low. It remains possible for price to swing up in a "B" wave and then have a "C=A" wave down to a level in the 750's or 760's, which is one of the points I've annotated onto this chart. We should also take note that volume was very good the past two trading days. That may have been due to options expiration, but it does look good for a potentially bullish case and therefore should not be overlooked.

Remember that VIX options expire this coming Wednesday, and that may lend a bit of a twist as the market action unfolds this upcoming week. I wouldn't expect it to alter the fundamentals or the Elliott Wave structure, but it could cause the action to feel a bit more dramatic than it might otherwise. Finally, when you look at the ChartsEdge market map for this week, it shows price testing upward by the end of this week to that level of ~896 that would be a .618 retrace from 817 back up to the January 6 swing high - that's a classic level for an Elliott Wave 2 pullback, prior to a third wave that resumes more strongly in the direction of the first wave, so let's just be careful and never let a short-term chart dictate a bias for the bigger picture.

Note to anyone looking for Merriman's weekly comments - I am going to start placing those each week into my UBTNB3 site, and started that yesterday. So check that out, or just keep an eye on the "feed" from that site over to here (shown at the right side of this page) - it does work, although there seems to be a small delay. Also, Merriman didn't actually produce a new weekly update due to his travel schedule this weekend, so I posted instead excerpts from his public article with pertinent sections from his new book on what to expect during 2009.