Monthly Archives: July 2012

S&P 500 Elliott Wave Technical Analysis – 30th July, 2012

Last analysis expected price to reach up to 1,393 – 1,394 during Monday’s session. Price reached up to 1,391.74, 1.26 points short of the small target zone.

Thereafter, I expected the S&P 500 to move lower for a low degree correction which is exactly what happened.

The target for the next wave can now be calculated at two wave degrees and a parallel channel should show us where price may be contained, and will provide first indication of a trend change.

Continue reading S&P 500 Elliott Wave Technical Analysis – 30th July, 2012

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

Movement above 1,380.39 was unexpected and has invalidated the wave count.

I have a new wave count which is slightly different. I have just the one hourly chart today.

Click on the charts below to enlarge.

S&P 500 daily 2012

Movement above 1,380.39 has invalidated the prior labeling of wave (2) black as over. Clearly it is continuing higher which was unexpected.

Upwards movement within (2) black is choppy and overlapping, which contrasts with downwards movement of wave (1) black as a clear impulse. So far this upwards movement has a cursory count of 7 which is corrective. Despite strong upwards movement of the last 2 days it still looks most likely that this movement is a second wave correction. Second wave corrections are more likely to be deep. When they are very deep they convince us that we have not seen a trend change, and they do this right before a third wave takes off in the opposite direction. We should keep this tendency in mind.

This wave count sees a big trend change at the price high of 1,422.38. Primary wave C should make substantial new lows below the end of primary wave A which had its low at 1,074.77. Primary wave C would reach 1.618 the length of primary wave A at 967, completing a typical expanded flat for cycle wave a.

Within primary wave C wave (1) black is a complete five wave impulse downwards. Wave (2) black may be completing a single zigzag structure. Within wave (2) black wave A blue is a leading contracting diagonal, wave B blue is a sharp zigzag, and wave C blue is a simple impulse. Waves A and C blue have good alternation in structure.

We may use Elliott’s channeling technique to draw a parallel channel about wave (2) black. When this channel is breached by downwards movement we should have confirmation of a trend change.

The only way at this stage that wave (2) black could continue further would be as a very rare triple zigzag. The rarity of triples means the probability of wave (2) black continuing further is extremely low.

Wave (2) black may not move beyond the start of wave (1) black. This wave count is invalidated with movement above 1,422.38.

If price did move above 1,422.38 then the only possible explanation I can see at this stage is a very rare expanding triangle at super cycle degree, as the first alternate monthly wave count here.

S&P 500 hourly 2012

Within wave (2) black wave C blue is incomplete.

When markets open on Monday morning we may see a very little downwards movement for wave iv orange. Thereafter, wave v orange upwards should complete wave iii pink within wave C blue.

At 1,394 wave iii pink would reach 4.236 the length of wave i pink. At 1,394 wave (v) green would reach 1.618 the length of wave (i) green. This gives us a small one point target zone for upwards movement which should be reached during Monday’s session.

Wave iv pink may not move into wave i pink price territory. This wave count is invalidated with movement below 1,343.98 in the short to mid term.

After wave iv pink is complete then further upwards movement should complete wave v pink. This would complete the entire correction of wave (2) black.

At 1,399 wave C blue would reach 0.618 the length of wave A blue. When wave iv pink is complete I will use Fibonacci ratios between pink waves within wave C blue to refine this target and it will probably change.

To the upside the invalidation point is at 1,422.38. Wave (2) black may not move beyond the start of wave (1) black.

DJIA Elliott Wave Technical Analysis – 27th July, 2012

Last week’s analysis was invalidated with movement below 12,784.43. Movement above 12,977.57 during Friday’s session indicates that this correction is obviously not over.

I have the one daily wave count with two hourly wave counts this week.

Continue reading DJIA Elliott Wave Technical Analysis – 27th July, 2012

S&P 500 Elliott Wave Technical Analysis – 26th July, 2012

Yesterday’s analysis of the S&P 500 had two hourly wave counts with about an even probability. Movement above 1,343.77 invalidated the main hourly wave count and confirmed the alternate. At that stage the preferred target for upwards movement was about 1,360.85. Price reached up to 1,363.13 during Thursday’s session.

Today I have again two hourly wave counts for you, but today the main wave count has a higher probability than the alternate.

Click on the charts below to enlarge.

S&P 500 daily 2012

This wave count sees a big trend change at the price high of 1,422.38. Primary wave C should make substantial new lows below the end of primary wave A which had its low at 1,074.77. Primary wave C would reach 1.618 the length of primary wave A at 967, completing a typical expanded flat for cycle wave a.

Within primary wave C wave (1) black is a complete five wave impulse downwards. Wave (2) black now is most likely complete as a double zigzag structure.

The parallel channel about wave (2) black is a best fit to contain all this upwards movement. We now have a clear channel breach with a full daily candlestick below the channel. This gives some confirmation that (2) black should be over and (3) black should be underway.

The only way at this stage that wave (2) black could continue further would be as a very rare triple zigzag. The rarity of triples means the probability of wave (2) black continuing further is extremely low.

Movement below 1,325.41 would provide a lot more confidence in this wave count. At that stage wave c pink of Y blue could not possibly be continuing further and so the entire correction for wave (2) black would have to be over.

At 1,129 wave (3) black would reach 1.618 the length of wave (1) black.

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 1,380.39.

Main Hourly Wave Count.

S&P 500 hourly 2012

This wave count has an excellent look and fit. Instead of the slightly truncated C wave I had labeled for yesterday’s analysis, that was only wave 1 within the C wave. Wave (ii) green may be almost complete as a typical zigzag ending typically a little above the 0.618 Fibonacci ratio of wave (i) green downwards.

There is not enough downwards movement at the end of Thursday’s session to confirm that wave 5 purple within wave c orange is over, and on the 5 minute chart it looks most likely that wave 5 purple requires a final fifth wave upwards to complete the structure.

Within wave c orange wave 3 purple has no Fibonacci ratio to wave 1 purple. At 1,364 wave 5 purple would be equal in length with wave 1 purple.

We may use Elliott’s channeling technique to draw a parallel channel about the zigzag of wave (ii) green. When this channel is breached by downwards movement then we shall have confirmation that the upwards zigzag is over and the next move down is underway. It is most likely that this next move is a third wave.

Because the channel drawn about the zigzag is so far away we could also use the channel about wave c orange within wave (ii) green. This smaller channel is drawn first from the lows of waves 2 to 4 purple then a parallel copy is placed upon the high of wave 3 purple. I have nudged the lower trend line down to contain all of this movement. If thus channel is breached tomorrow then this would be an early indication of a possible end to wave (ii) green and the start of wave (iii) green downwards.

If price moves below 1,343.98 (the high of wave a orange) tomorrow then we can be sure that the upwards movement is definitely a three wave structure which is over, because at that stage downwards movement may not be a fourth wave correction in a continuing new impulse upwards.

When I know where wave (ii) green has ended then I can calculate a target for wave (iii) green for you. At this stage expect wave (iii) green to be about 83 points in length.

Further upwards movement to begin tomorrow’s session may not move beyond the start of wave (i) green. This wave count is invalidated with movement above 1,380.39.

Alternate Hourly Wave Count.

S&P 500 hourly alternate 2012

If we simply move the degree of labeling within wave (ii) green down one degree we see that only wave a orange may be almost complete if wave (ii) green may be unfolding as a flat correction.

A flat correction requires the A wave to subdivide into a three and the B wave to reach at least 90% of wave A.

We must look at the downwards structure carefully. If it is choppy and overlapping, if it looks corrective and subdivides into a three, then this alternate may be correct. If it is strong and impulsive subdividing into a five then the main hourly wave count would be correct.

This alternate also must encompass the idea of a double combination unfolding for wave (ii) green (with the depth achieved so far a double zigzag would be unlikely). If this is the case then wave X downwards would most likely be a zigzag but does not have to reach 90% the length of the first zigzag upwards.

This wave count has a lower probability than the main wave count today because it sees wave (ii) green as a slightly less likely flat correction (less likely than a zigzag in a second wave position) and it sees wave (ii) green as continuing longer in duration than wave (i) green downwards when second waves are more commonly brief.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement above 1,380.39.

S&P 500 Elliott Wave Technical Analysis – 25th July, 2012

Yesterday’s analysis of the S&P 500 expected choppy, overlapping movement trending upwards for Wednesday’s session. Price has failed very slightly to make a new high so we did not see the upwards movement I was anticipating, but the sideways and overlapping movement is typical of a correction which was expected.

With more structure in this new movement to analyse I can now have a better idea of what should happen next.

I still have just the one daily wave count with two hourly wave counts today.

Click on the charts below to enlarge.

S&P 500 daily 2012

This wave count sees a big trend change at the price high of 1,422.38. Primary wave C should make substantial new lows below the end of primary wave A which had its low at 1,074.77. Primary wave C would reach 1.618 the length of primary wave A at 967, completing a typical expanded flat for cycle wave a.

Within primary wave C wave (1) black is a complete five wave impulse downwards. Wave (2) black now is most likely complete as a double zigzag structure.

The parallel channel about wave (2) black is a best fit to contain all this upwards movement. We now have a clear channel breach with a full daily candlestick below the channel. This gives some confirmation that (2) black should be over and (3) black should be underway.

The only way at this stage that wave (2) black could continue further would be as a very rare triple zigzag. The rarity of triples means the probability of wave (2) black continuing further is extremely low.

Movement below 1,325.41 would provide a lot more confidence in this wave count. At that stage wave c pink of Y blue could not possibly be continuing further and so the entire correction for wave (2) black would have to be over.

At 1,129 wave (3) black would reach 1.618 the length of wave (1) black.

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 1,380.39.

Main Hourly Wave Count.

S&P 500 hourly 2012

This main hourly wave count and the alternate below have about an even probability.

Wave (ii) green may have been over as a very shallow brief zigzag. There is no Fibonacci ratio between waves a and c orange. Wave c orange is very slightly truncated but all the subdivisions within it are correct and complete on the 5 and 1 minute charts. Wave (ii) green is a 28% correction of wave (i) green.

Price has found resistance at the lower edge of the parallel channel on the daily chart. This may have been the cause of the very slight truncation.

If this wave count is correct then tomorrow should see strong downwards movement as a third wave begins. At 1,261 wave (iii) green would reach 1.618 the length of wave (i) green.

This wave count would be confirmed with a clear 5 down on the 5 minute to hourly chart (I will be looking closely at the structure of the next session on all time frames). This would eliminate a possible B or X wave downwards and so eliminate the alternate below. Unfortunately, there is no lower price point which differentiates the two wave counts.

This wave count is invalidated by any movement above 1,343.77. Within wave (iii) green no second wave correction may move beyond the start of the first wave.

Alternate Hourly Wave Count.

S&P 500 hourly 2012

If we simply move the degree of labeling within this correction of wave (ii) green down one degree, we may have seen only wave a orange (or w orange) complete.

Wave (ii) green may be unfolding as a flat correction where wave a orange subdivides into a three. For a flat correction wave b orange should be at least 90% the length of wave a orange below 1,331. Within a flat correction wave B may make a new price extreme beyond the start of wave A so there is no downwards invalidation point and we could see a new low tomorrow.

Wave (ii) green may be unfolding as a double zigzag or double combination, where the first structure in the double is complete and would be labeled wave w orange (instead of wave a orange). A double would see a three down (most likely a zigzag) labeled wave x orange. This would not have to be at least 90% the length of wave a orange and if downwards movement falls short of 1,331 tomorrow then this would be a likely explanation.

When wave b orange (or wave x orange) is complete we should see further upwards movement for wave c orange (or sideways movement for wave y orange) to complete the entire correction for wave (ii) green.

This alternate wave count expects overall choppy overlapping movement for tomorrow: beginning with downwards movement possibly to new lows, and thereafter upwards movement possibly to new highs.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement above 1,380.39.

S&P 500 Elliott Wave Technical Analysis – 24th July, 2012

Exactly as expected Tuesday’s session saw the S&P 500 move lower. The short term target was 1,328. Price fell just 1.24 points short of this target to reach 1,329.24 before turning upwards.

I have still just the one daily and one hourly chart today. I will be using the parallel channel on the daily chart as an important indicator of a trend change.

Click on the charts below to enlarge.

S&P 500 daily 2012

This wave count sees a big trend change at the price high of 1,422.38. Primary wave C should make substantial new lows below the end of primary wave A which had its low at 1,074.77. Primary wave C would reach 1.618 the length of primary wave A at 967, completing a typical expanded flat for cycle wave a.

Within primary wave C wave (1) black is a complete five wave impulse downwards. Wave (2) black is unfolding as a double zigzag structure. The purpose of a double zigzag is to deepen a correction. At this stage the final structure of wave Y blue, the second zigzag, may now be complete. However, we do not have confirmation of this trend change. Until we do have confirmation it is very important to accept the possibility that we may yet see further upwards movement.

The parallel channel about wave (2) black is a best fit to contain all this upwards movement. When we have a clear channel breach with a full daily candlestick below the channel then we may have confirmation that (2) black would be over and (3) black would be underway.

Wave (2) black may not move beyond the start of wave (1) black. This wave count is invalidated with movement above 1,422.38.

S&P 500 hourly 2012

We now have a fairly clear five down on the hourly chart. This should be followed by a second wave correction labeled (ii) green.

Ratios within wave (i) green are: wave iii orange is 2.02 points short of 1.618 the length of wave i orange, and wave v orange has no adequate Fibonacci ratio to either of waves i or iii orange.

Second wave corrections are normally deep rather than shallow so I favour the 0.618 Fibonacci ratio of wave (i) green at 1,360.85 as a target. Wave (ii) green may unfold as a simple zigzag which may see it over in one or two sessions. This may take price back into the parallel channel on the daily chart.

If the parallel channel on the daily chart provides resistance to upwards movement it may hold the correction to a more shallow target about the 0.382 Fibonacci ratio of wave (i) green at 1,348.78. A more shallow correction may unfold as a flat or a combination and may be more time consuming, possibly lasting three or four sessions.

At this very early stage it is not possible to say what structure will unfold or how long it will take, only to say that it would be more likely to be a brief sharp zigzag.

I have used Elliott’s second technique to draw a parallel channel around wave (i) green downwards. Draw the first trend line from the highs of waves ii and iv orange, then place a parallel copy upon the low of wave iii orange. Wave (ii) green should breach the upper edge of this channel which would confirm an end to wave (i) green downwards and the start of wave (ii) green upwards.

When wave (ii) green is over we may expect an increase in downwards momentum as a third wave unfolds.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement above 1,380.39.

S&P 500 Elliott Wave Technical Analysis – 23rd July, 2012

Last analysis of the S&P 500 expected a final push upwards before a trend change. Movement below 1,354.3 invalidated the hourly wave count and indicated a possible trend change may have come earlier than expected. I will use parallel channels on the hourly and daily charts to confirm a trend change.

I still have just the one daily chart and one hourly chart today.

Continue reading S&P 500 Elliott Wave Technical Analysis – 23rd July, 2012

DJIA Elliott Wave Technical Analysis – 20th July, 2012

There was no confirmation of a trend change last week and we had to allow for the possibility of new highs as per the alternate wave count for the Dow.

Movement above 12,961.3 invalidated the main hourly wave count and confirmed the alternate.

I have adjusted the hourly wave count to one which has a much better look and fit. The target for this movement to end has a very good probability.

Continue reading DJIA Elliott Wave Technical Analysis – 20th July, 2012

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

Last analysis expected Friday’s session to begin with at least a little downwards movement. A possible contracting triangle was invalidated with movement below 1,372.33 and at that stage I expected downwards movement to end a little below 1,368.7 and to last at least one to two sessions.

Price reached down to 1,362.19 which remains within the allowable limits for the wave count and is just a little below where I expected it to reach.

I still have just one daily and one hourly wave count to end the trading week.

Continue reading S&P 500 Elliott Wave Technical Analysis – 20th July, 2012

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

Last analysis had only one daily and one hourly wave count for the S&P 500. I expected upwards movement to a small 1 point target zone at 1,378 – 1,379 to begin Thursday’s trading session. Price rose to 1,378.23 before moving sideways and slightly higher for the rest of the session.

At this stage the structure is unfolding as expected.

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