Will 848 be the next stop on S&P 500 market's southbound train? Elliott Wave alternatives

The S&P 500 level of 848 may be the next focus for the markets, because that's where its 50-day moving average now resides. Many chart analysts are considering this to be a possible objective, that could be just a pullback allowing a good entry for a bullish head and shoulders (H&S) pattern. But if the market loses support there, it can be more bearish. These alternative potentials fit in with Elliott Wave analysis too. More than one Elliott Wave scenario may remain in play for the equities markets. Those that seem to be the best contenders are the idea of a fifth wave down to new lows still in store for equities markets, and two views of the bear-market rally still having higher "B" wave targets in Tony Caldaro's OEW analysis. I've reviewed the ones I consider to be the primary contenders in prior posts here, including Comparing the Elliott Wave cases for and against another new low before higher highs in equities markets (5/12/09), Tony Caldaro's Objective Elliott Wave update includes adjustments to S&P 500 wave count (5/7/09), and especially Surfing the Elliott Waves: Competing views on how bearishly the S&P 500 market may drop in weeks ahead (4/25/09). At this point, I don't see anything that negates the possibility that I've mentioned in these discussions, that the markets completed a large 4th wave and the next step is a 5th wave to new lows. True, it isn't the only possibility and there are many looking for the idea of a pullback to perhaps the 50-day moving average, which is now about 848 in the S&P 500. In fact, that level would test one of Tony Caldaro's pivots, so it may be an important one to watch.

Tony Caldaro has outlined two possibilities in his Objective Elliott Wave (OEW) methodology, and if you're following his daily and weekly updates (see his site, and site feed, at right; his weekly updates also posted here each weekend) you're aware of those. I've included below his charts of the S&P 500 and the Dow Jones Industrial Average that depict these. The SPX is his hourly chart, and the Dow is his daily chart. Looks like the SPX needs to remain above 878.94 in order to retain the potential for the idea marked in his SPX chart to remain valid with a target to somewhat higher levels for the bear-market rally.

If the market already completed a small first wave down and is now working on another bigger wave down, that can be consistent with either the 5th wave down idea that I've depicted and that Andre Gratian has also been working with (although his might take a different shape than mine - not worried about details on that right now). It can also be consistent with one of Tony Caldaro's two OEW counts that would point to new lows coming up (except that I think Tony expected a higher level to be reached on this rally leg first.)

I should also mention that Andre Gratian's idea of a 4th wave may have a component that is similar to Tony's concept of a pullback followed by higher levels - in that case, it would mean that the market only finished wave "a" of a 4th wave, with its wave "b" starting and then later a "c" wave higher. But we'll have to see Andre's update this weekend to see how it's looking with his overall chart analysis.

It can also be consistent with Tony's b-wave down that fits the bullish H&S scenario others are looking at and which I've posted here. Another reason to consider the 848 area. For that matter, there's also a level at about 833/838 that the market found significant weeks ago, both on the daily Fibonacci retracement levels and on my big-picture monthly SPX chart ... even more reasons to watch what the market does around 838/848. Just in case that's where the market's starting to move.