On May 22, U.S. stocks rose at the open but then reversed sharply lower. For the DJIA, it was the "biggest 1-day swing in 6 months," said marketwatch.com.
The move coincided with congressional testimony by the Fed Chairman Ben Bernanke. I say "coincided," because the market's mood, visible via Elliott wave patterns, was suggesting a nearby top even before Mr. Bernanke's comments.
See for yourself. As early as May 20, the S&P 500 was showing this wave pattern (partial wave labels shown):
As you can see from the above chart, the market was finishing a wave 5, the ending wave of an Elliott wave sequence. That was the reason why before the open on May 22, our U.S. Intraday Stocks Specialty Service expected a move higher yet warned of a nearby top:
[Posted On:] May 22, 2013 09:20 AM
Market Overview: Good morning. Higher futures numbers this morning suggest this advance may not be quite done. At least in the NASDAQ that is what the internals suggested for the fifth-wave of an ending diagonal, so a flexible view of the count in the other markets should be maintained. The internals for this move up from the April pivot low suggest all of five-waves up may be in place.
Another morning intraday comment gave an upper price target, 1683-1684:
5/22/2013 10:06:20 AM ET - The new high this morning suggest wave v is extending as a larger five, which would likely make this immediate action a third-wave within v. It was noted yesterday that a measure potential target was up around 1683/84. Looks like that's where trade is headed.
The topping expectation came true later on May 22, when the market hit a high of 1686.73 and reversed sharply to end the daylike this:
From the intraday high of 1686.73, the S&P 500 fell 36 points.
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