S&P 500's movements have analysts back to the chalk board - factors to consider today

The S&P 500 has avoided the immediate head and shoulders (H&S) which so many eyes were on - perhaps too many, as some have suggested. For us, the immediate Elliott Wave count idea of a (1),(2),1,2 looks very precarious right now, because price zoomed past the 908 level that would be a common retracement for the smaller second wave as well as above the downtrend line that would be a common channel line for this. However - don't forget that this movement does not absolutely rule out the Elliott Wave potential that would point to a third wave down. This may not be pleasant to hear right now, but this Elliott Wave potential doesn't get ruled out unless the index surpasses the prior swing high at 932. You may also remember that not only 912, but also 922 were significant levels before, so it isn't unreasonable to think about these levels currently. (Interesting 10-point differences between these levels, and our 902 and 892 which may still be significant if or when this turns down again.)

Analysts using the Bradley model should be cheering for this of course, as today is the second day of the July 14-15 turn window. Then, I also am aware there are some analysts out there - Terry Laundry, and I know that at Phil's Stock World there seems to be at least one - who have been thinking something different from the H&S or Elliott Wave potential for a movement down. Phil's idea seems to be a trading range, and Terry had been looking for a move up although his 55-day moving average got violated, maybe if the S&P 500 can make the 55-day MA support then Terry will get back with that again - will see. Meantime, traders will be looking in the short-term for how the market reacts around these levels, and so will we!

One more comment - while it is true that channels usually help define EW patterns, there are times when a pattern is valid and at the same time moves outside of channel lines. I have seen this in the past with some second wave pullbacks upward - so it is one of the reasons why I do not view the channel line as an "absolute" in terms of the EW count.