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Stock Market Symmetry Scenario Gives S&P 500 Decline More Room to Run

Stock-Markets / Stock Index Trading May 17, 2009 - 01:29 PM

Best Financial Markets Analysis Article Let¹s say that the symmetry exhibited by the March-May rally with the January-March decline continues into the future. What would the next leg of the S&P 500 look like?

Looking at the e-mini futures chart (which gives us a view ahead of Monday¹s open on the cash markets), if we decide to take the May high at 929.50 as the end of the upleg from the March low at 662.50 -- which is symmetrical with the January-March decline -- then the current weakness into the 880-878 area represents THE START of a much larger downleg that will mimic the inverse of the November-January price move from 735.25 to 939.50.

That would mean that the e-mini S&P 500 has embarked on a decline into the vicinity of 735 to achieve symmetry within a much larger developing pattern -- after which another massively powerful bull leg will emerge that will leave behind a much larger base pattern from where an extended period of very positive price action could (will) emerge.

If the e-mini S&P opens weaker on Sunday-Monday and sustains beneath the 20 DMA (now at 879.20), then the ³symmetry scenario² will begin to gain added significance in my work. ETF traders might want to keep an eye on the ProShares Ultrashort SPY (NYSE: SDS), who chart is also included below the e-mini S&P chart.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of

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