Elliott Wave Options: Elliott Wave 4 Bounce? … Support at 50% Retracement

After the market’s steep drop in September, investors are looking for where the market may find support and start moving higher.

There are several key points where the market could find support. The past week has seen some volatile intra-day moves, and some overall flat days compared to the big swings in the last week of September. Does that mean we’ve found support?

Possibly. Using the Elliott Wave model, a downturn was likely moving into September. That wave has nearly been fulfilled, with markets sinking to June lows.

Last Wednesday’s drop to 4,220 on the S&P 500 and sharp rebound off of that low, followed up by this week’s trading over that level, suggests markets are now starting to consolidate before a bounce higher.

There are two other key technical levels to monitor in the days ahead. The first is the market’s 200-day moving average, which is right around 4,200 for the S&P 500.

On the upside, stocks could rise to 4,400, which would fill the gap that markets had after the September Fed meeting. After that, markets may struggle on the upside in the short-term before moving higher.

It’s clear that markets are still volatile on a daily basis. And that investors can buy some much better deals on oversold stocks here. Traders can benefit from trading the market’s big intra-day swings.

To watch the full analysis, click here.