Yearly Archives: 2012

S&P 500 Elliott Wave Technical Analysis – 28th December, 2012

Last analysis expected some upwards movement before price turned lower, but this is not what happened. Price has just moved lower.

The main wave count remains valid and little changed. I have an hourly chart for the alternate for you to end the week.

Click on the charts below to enlarge.

Main Wave Count.

S&P 500 daily 2012

The structure for primary wave B is a triple zigzag, and price is now within the third zigzag in the triple labeled wave (Z) black.

Wave (Z) black is incomplete and is unfolding as an exaggerated zigzag.

Wave A blue must be truncated to subdivide into a five wave structure.

At 1,470 wave C blue would reach 0.618 the length of wave A blue. About this point primary wave B would also be only 139% of primary wave A. Movement to slightly above 1,470 would avoid a truncation and keep the length of primary wave B closer to the common maximum of 138%.

There is no upper invalidation point for this wave count, but significant movement above 1,470 has a low probability.

Wave A blue lasted 87 days (2 short of a Fibonacci 89). Wave B blue lasted 28 days. I would expect wave C blue to be about 34 days in duration. So far it has lasted 29 days and it should continue for another one to two weeks.

Wave C blue must subdivide into a five wave structure as either an ending diagonal or an impulse. An ending diagonal requires all subwaves to subdivide as zigzags and because the first wave upwards labeled i pink is a five wave impulse an ending diagonal may be eliminated. Wave C blue must be unfolding as an impulse. The structure is incomplete and requires further upwards movement.

Recent upwards movement from the low labeled wave B blue at 1,343.35 looks like a smaller fractal of the upwards movement from the low labeled wave (X) black.

S&P 500 hourly 2012

Last analysis expected wave b orange to move higher. This is not what happened, but wave b orange did move further as a sideways triangle.

Within the triangle wave C purple is itself a triangle. This structure has a good look on the five minute chart.

Following completion of the triangle downwards movement subdivides into a five wave impulse. Because it has not made a new low below the end of wave a orange at 1,401.8 it is likely that downwards movement is just wave 1 purple within wave c orange. Wave c orange is likely to end below the end of wave a orange to avoid a truncation.

At 1,393 wave c orange would reach 0.382 the length of wave a orange.

Within wave c orange wave 2 purple may not move beyond the start of wave 1 purple. In the short term this wave count is invalidated with movement above 1,410.79. If price moves above that point in the next one or two sessions then it is possible that wave c orange is complete and truncated and that wave (ii) green is complete. At that stage I would expect upwards movement may be wave (iii) green which must make a new high.

The channel drawn here is a best fit. When it is clearly breached by upwards movement we may expect that wave (ii) green is complete and wave (iii) green has begun.

Wave c orange to complete wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement below 1,385.43.

If this wave count is invalidated with downwards movement then we may use the alternate below.

Alternate Wave Count.

S&P 500 daily alternate 2012

While price is below 1,474.51 it is still possible that primary wave B is a complete triple zigzag and downwards movement is the start of primary wave C.

Downwards movement from the high is difficult to see as an impulse and it cannot be a leading diagonal. The problem is the first series of overlapping waves labeled wave 1 blue. I have labeled this as a leading diagonal and each subwave subdivides correctly, but the wave lengths are not as expected. The structure is neither an expanding or contracting diagonal, wave iv pink is shorter than wave ii pink, but wave iii pink is longer than wave i pink and wave v pink is longer than wave iii pink.

This reduces the probability that this wave count is correct, but it does suffer from the same problem now as the main wave count (although to a greater degree).

The biggest problem with this wave count is the subdivisions of wave C blue within wave (2) black. All the subwaves of an ending diagonal must subdivide into zigzags, and within this structure subwaves iii and v pink look very much like five wave impulses on the hourly chart. This reduces the probability of this wave count significantly.

Upwards movement from the low of wave (1) black subdivides nicely into a zigzag and so may be a completed second wave correction for wave (2) black which is an 80% correction of wave (1) black. Wave C blue is just 3.24 points short of equality with wave A blue.

If this alternate is correct then we may expect movement below 1,385.43 to confirm it within the next two weeks.

Wave (3) black will reach 1.618 the length of wave (1) black at 1,236.

Within wave (3) black no second wave correction may move beyond the start of its first wave. This wave count is invalidated with movement above 1,448.

S&P 500 hourly alternate 2012

If upwards movement to the high at 1,448 is a complete zigzag for wave (2) black then wave C blue within it must be an ending diagonal. Within an ending diagonal all the subwaves must subdivide into zigzags. Waves iii and v pink are subjective; it is possible to see these movements as both zigzags and impulses. This wave count sees them as zigzags. I have checked subdivisions carefully on the five minute chart and it has a nice fit. With that done I now consider this alternate wave count to have a very good probability.

Downwards movement following the end of wave (2) black subdivides nicely into a five wave impulse with an extended fifth wave.

Wave ii pink may have been a double combination: wave (w) green is a zigzag, wave (x) green joining the two structures in the double is a zigzag, and wave (y) green is a triangle ending at 1,412.33.

At 1,336 wave iii pink would reach 1.618 the length of wave i pink.

Movement below 1,385.43 would invalidate the main wave count and confirm this alternate. At that stage we may have more confidence in this alternate and expect the target to be met.

Within wave iii pink no second wave correction may move beyond the start of its first wave. This wave count is invalidated with movement above 1,412.33.

If price moves above 1,412.33 it is possible that wave ii pink is not over and is continuing further as a more complicated and time consuming correction. As it is labeled here it is remarkably brief and shallow for a second wave, so movement above the invalidation point on this hourly chart would indicate a continuation of the second wave and would not invalidate the trend change.

S&P 500 Elliott Wave Technical Analysis – 27th December, 2012

Price has moved lower but remains above the lower invalidation point.

As stated in yesterday’s email to members, I expect that the leading diagonal structure is complete and this movement may be a correction.

The daily chart is mostly the same, and I have a new alternate for you.

Click on the charts below to enlarge.

Main Wave Count.

S&P 500 daily 2012

The structure for primary wave B is a triple zigzag, and price is now within the third zigzag in the triple labeled wave (Z) black.

Wave (Z) black is incomplete and is unfolding as an exaggerated zigzag.

Wave A blue must be truncated to subdivide into a five wave structure.

At 1,470 wave C blue would reach 0.618 the length of wave A blue. About this point primary wave B would also be only 139% of primary wave A. Movement to slightly above 1,470 would avoid a truncation and keep the length of primary wave B closer to the common maximum of 138%.

There is no upper invalidation point for this wave count, but significant movement above 1,470 has a low probability.

Wave A blue lasted 87 days (2 short of a Fibonacci 89). Wave B blue lasted 28 days. I would expect wave C blue to be about 34 days in duration. So far it has lasted 28 days and it should continue for another one to two weeks.

Wave C blue must subdivide into a five wave structure as either an ending diagonal or an impulse. An ending diagonal requires all subwaves to subdivide as zigzags and because the first wave upwards labeled i pink is a five wave impulse an ending diagonal may be eliminated. Wave C blue must be unfolding as an impulse. The structure is incomplete and requires further upwards movement.

Recent upwards movement from the low labeled wave B blue at 1,343.35 looks like a smaller fractal of the upwards movement from the low labeled wave (X) black.

S&P 500 hourly 2012

The leading diagonal structure for wave (i) green can be seen as complete. The diagonal is expanding: wave iii orange is longer than wave i orange and wave iv orange is longer than wave ii orange, but wave v orange is slightly shorter than wave i orange. The wave lengths are not what should be expected, but the third wave is not the shortest and the subdivisions are correct for a leading diagonal.

Downwards movement from the high at 1,448 so far subdivides into a five wave structure. This would be only wave a orange within wave (ii) green.

Wave b orange may not move beyond the start of wave a orange. This wave count is invalidated in the short term with movement above 1,448.

Following a leading diagonal in a first wave position the second wave is often very deep. I would expect wave (ii) green to end below 0.786 of wave (i) green, below 1,398. When we have the end of wave b orange then the ratio between waves a and c orange may be used to calculate a target for wave (ii) green to end.

Wave (i) green lasted 14 sessions. Wave (ii) green may be expected to last about one to two weeks; so far it has lasted only one week.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement below 1,385.43. If it is invalidated with downwards movement we may use the alternate below.

Alternate Wave Count.

S&P 500 daily alternate 2012

This wave count is the same as I have used previously up to the end of primary wave B at 1,474.51. It sees a trend change at primary degree at this point.

Downwards movement from the high is difficult to see as an impulse and it cannot be a leading diagonal. The problem is the first series of overlapping waves labeled wave 1 blue. I have labeled this as a leading diagonal; each subwave subdivides correctly but the wave lengths are not as expected. The structure is neither an expanding or contracting diagonal, wave iv pink is shorter than wave ii pink, but wave iii pink is longer than wave i pink and wave v pink is longer than wave iii pink.

This reduces the probability that this wave count is correct, but it does suffer from the same problem now as the main wave count (although to a greater degree).

The biggest problem with this wave count is the subdivisions of wave C blue within wave (2) black. All the subwaves of an ending diagonal must subdivide into zigzags, and within this structure subwaves iii and v pink look very much like five wave impulses on the hourly chart. This reduces the probability of this wave count significantly.

Upwards movement from the low of wave (1) black subdivides nicely into a zigzag and so may be a completed second wave correction for wave (2) black which is an 80% correction of wave (1) black. Wave C blue is just 3.24 points short of equality with wave A blue.

If this alternate is correct then we may expect movement below 1,385.43 to confirm it within the next two weeks.

Wave (3) black will reach 1.618 the length of wave (1) black at 1,236.

DJIA Elliott Wave Technical Analysis – 21st December, 2012

Last week’s analysis for the Dow expected more upwards movement which has happened.

This week I have the same main wave count for you with an alternate. At this stage the main and alternate wave counts objectively (considering the Dow as its own stand alone market, a pure EW approach) have about an even probability. We may use invalidation / confirmation points to work with these two wave counts next week.

However, the alternate wave count is the wave count which is in line with the S&P 500 and it may be more likely.

Continue reading DJIA Elliott Wave Technical Analysis – 21st December, 2012

S&P 500 Elliott Wave Technical Analysis – 20th December, 2012

Last analysis expected Thursday’s session to begin with a very little downwards movement, followed by upwards movement. This is exactly what has happened.

The wave count remains the same as yesterday. The mid term target remains the same.

Click on the charts below to enlarge.

S&P 500 daily 2012

The structure for primary wave B is a triple zigzag, and price is now within the third zigzag in the triple labeled wave (Z) black.

Wave (Z) black is incomplete and is unfolding as an exaggerated zigzag.

Wave A blue must be truncated to subdivide into a five wave structure.

At 1,470 wave C blue would reach 0.618 the length of wave A blue. About this point primary wave B would also be only 139% of primary wave A. Movement to slightly above 1,470 would avoid a truncation and keep the length of primary wave B closer to the common maximum of 138%.

There is no upper invalidation point for this wave count, but significant movement above 1,470 has a low probability.

Wave A blue lasted 87 days (2 short of a Fibonacci 89). Wave B blue lasted 28 days. I would expect wave C blue to be about 34 days in duration. So far it has only lasted 23 days and it should continue for another couple of weeks or so.

Wave C blue must subdivide into a five wave structure as either an ending diagonal or an impulse. An ending diagonal requires all subwaves to subdivide as zigzags and because the first wave upwards labeled i pink is a five wave impulse an ending diagonal may be eliminated. Wave C blue must be unfolding as an impulse. The structure is incomplete and requires further upwards movement.

Recent upwards movement from the low labeled wave B blue at 1,343.35 looks like a smaller fractal of the upwards movement from the low labeled wave (X) black.

S&P 500 hourly 2012

As expected wave B purple moved lower. Wave B purple is a 42% correction of wave A purple. Within wave B purple there is no Fibonacci ratio between waves (A) and (C) aqua.

If wave B purple continues further as a double zigzag or double combination it may not move beyond the start of wave A purple. In the short term (the next session) this wave count is invalidated with movement below 1,411.88.

Wave C purple has very likely now begun. At 1,455 wave C purple would reach 0.618 the length of wave A purple and wave v orange would be longer than wave iii orange.

When wave C purple is a complete five wave structure then the entire leading expanding diagonal of wave (i) green would be complete. At that stage we should expect a very deep correction for wave (ii) green to follow.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement below 1,385.43.

S&P 500 Elliott Wave Technical Analysis – 19th December, 2012

Last analysis expected upwards movement from the S&P 500. Price has moved lower within an allowable range, remaining above the invalidation point, but at this stage the wave count as I had it on the hourly chart does not now have the right look.

I have adjusted analysis of most recent movement and I have a new hourly wave count today which has a much better look. The mid term target remains the same, but this new wave count explains recent movement more satisfactorily.

Continue reading S&P 500 Elliott Wave Technical Analysis – 19th December, 2012