Yesterday’s analysis expected upwards movement to a short term target at 1,634 for both hourly wave counts, before expecting a short term trend change and downwards movement. Price did move higher to start Tuesday’s session but it fell well short of the target before turning downwards.
Today again both the hourly wave counts expect the same direction for the short term.
Click on the charts below to enlarge.
Main Wave Count.
The widest maroon channel is copied over from the monthly chart and contains all of cycle wave b. It may be that price found final resistance at the upper edge of this channel.
The black channel in the middle is drawn about the zigzag of primary wave Y. Draw the first trend line from the start of primary wave Y to the end of intermediate wave (B). Place a parallel copy upon the extreme within intermediate wave (A). The upper edge of this channel also may be where price found resistance and where intermediate wave (C) ended.
The smallest blue channel is the most conservative best fit I can see for intermediate wave (C). It is very clearly breached by downwards movement.
I have looked back to September 2000 on the daily chart at smaller narrow channels about intermediate degree movements. Most of the time a breach like this indicates a trend change, but not always. What would give me more confidence in this trend change is a clear breach of the black intermediate degree channel. When that is breached I will calculate downwards targets for you.
There is no classic technical divergence between price and MACD on the daily or weekly charts. This is possible, but unusual for the S&P 500. This must reduce the probability of this wave count. We must still seriously consider the alternate.
There are no Fibonacci ratios between minor waves 1, 3 and 5 within intermediate wave (C). There is no Fibonacci ratio between intermediate waves (A) and (C). This lack of Fibonacci ratios slightly reduces the probability of this main wave count.
Minor wave 2 may not move beyond the start of minor wave 1. This wave count is invalidated with movement above 1,687.18.
We did see some upwards movement but it fell well short of the target which was at 1,634. Tuesday’s movement looks like a continuation of micro wave 4 within this ending diagonal. The structure is still incomplete.
The diagonal is expanding. Micro wave 5 should be at least as long as micro wave 3 and probably at least a little longer. Micro wave 5 would reach equality with micro wave 3 at 1,628.
Minuette wave (ii) may not move beyond the start of minuette wave (i). This wave count is invalidated with movement above 1,654.19.
Movement above 1,654.19 would reduce the probability of this main wave count at the daily chart level, but it would not be invalidated. At that stage for this main wave count I would consider the alternate possibility that a leading diagonal may be unfolding for minor wave 1 rather than an impulse.
Alternate Wave Count.
The biggest problem with this wave count and the reason it is an alternate is the size of minor wave 4: it is out of proportion to all the other corrections within intermediate wave (C) and clearly breaches a channel containing intermediate wave (C) no matter how that channel is drawn. Sometimes fourth waves do this and so we must consider this possibility.
Within intermediate wave (C) minor wave 3 is 23 points longer than 4.236 the length of minor wave 1.
The lack of classic technical divergence between price and MACD supports this wave count. A final fifth wave up with slowing momentum would provide divergence and give a typical look.
At 1,740 intermediate wave (C) would reach equality with intermediate wave (A).
Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,409.16.
Again this alternate expects the same short term direction as the main wave count with the same target and the same structure unfolding.
When minuette wave (i) is a completed leading diagonal structure then the following correction for minuette wave (ii) is likely to be very deep. Minuette wave (ii) may not move beyond the start of minuette wave (i). This wave count is invalidated with movement below 1,601.06.
Movement below 1,601.06 would indicate that minute wave ii is incomplete and may be unfolding as an expanded flat correction. At that stage a target for downwards movement may be about 1,596. The invalidation point for this alternate would then move down to the start of minute wave i at 1,560.33.
Movement below 1,560.33 would significantly reduce the probability of this alternate at the daily chart level.