After repeated failed attempts to break the support at 880 levels, the S&P500 index has finally rallied to fresh 2009 highs. Where does this leave the Elliott wave analyst who has been looking for an eventual move lower towards 780?

If you go back to the recent updates on S&P500, you will notice two themes in my posts. First, we need to be patient for the support to break because we can never be sure where an extending wave will actually finish. Second, a 2nd retracement of an extended fifth wave can go above the peak. The most important doubt one can have now is whether the fifth wave finished at 930 or not. If we are still in the extending fifth wave, then the only thing that has changed is the proximity to a sell off. Of course, for those who are trading in options, time is of essence. The next resistance comes at 972, and above that we have a more significant level at 989. If the markets turn at either of these levels, then we are back in play. In any case, the downside target of around 780 is still valid, but obviously there is no point in talking about it until we see the market run out of steam. For now, it is futile to be selling because there is still some strength left. Buying here is a game that only fleet-footed players can engage in. We will take a look again when the index reaches our said upside targets.

Related S&P500 links:

Was that the stock market bottom?
SNP500 revisited
S&P500 and Citi
Fifth wave extensions can make you rich!
What is a significant rally in the stock markets?
Harmony in markets: S&P500
S&P 500: Potential Ending Diagonal Triangle
Ending Diagonal Triangle in S&P500?
S&P500 Elliott Wave update
S&P500 index: is a top already in?
S&P 500 update: where is the top?
S&P500 continues its rally
S&P500 remains resilient
S&P500 ready to dive?
S&P500 Update: May 19, 2009
S&P500 Elliott Wave update:21 May 2009