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Yesterday’s analysis had two hourly wave counts. The main hourly wave count was invalidated with movement below 1,787.85, and the alternate hourly wave count was confirmed.

At the daily chart level the wave count remains mostly the same. It is now extremely likely that the fourth wave correction is over, and I have only one hourly wave count for you today.

Click on the charts below to enlarge.

S&P 500 daily 2013

This wave count has a higher probability than the alternate. Upwards movement over the last 4 1/2 years subdivides best as a zigzag. If something is “off” about the supposed recovery then it must be a B wave because there is plenty that is off in this scenario in terms of social mood.

Minor wave 4 may have found support along the upper edge of the big maroon channel from the monthly chart, if the upper trend line is pushed out to encompass all of primary wave A.

Intermediate wave (5) is incomplete, with minor waves 1, 2, 3 and 4 now also complete. If tomorrow’s session completes a green candlestick which closes well into or above the body of the last red candlestick for December 3rd, then we shall have a morning doji star. If the following day also completes as a green candlestick the morning doji star would be confirmed and a trend change would be confirmed.

Because minor wave 3 is shorter than minor wave 1 this limits minor wave 5 to no longer than equality with minor wave 3. This would be achieved at 1,841.31, and this price point is a maximum for expected upwards movement. I would expect minor wave 5 to end slightly below this point.

Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,775.22.

Draw a parallel channel about this impulse of intermediate wave (5). Draw the first trend line from the highs labeled minor waves 1 to 3, then place a parallel copy upon the low labeled minor wave 2. This channel now perfectly shows where minor wave 4 has ended. Minor wave 5 may end either midway within this channel, or it should find resistance at the upper edge.

At 1,858.03 cycle wave b would reach 138% the length of cycle wave a. At super cycle degree this wave count sees a large expanded flat unfolding. Within the expanded flat the maximum common length of cycle wave b is up to 138% the length of cycle wave a. When cycle wave b becomes longer than this then the probability that an expanded flat is unfolding decreases. At that stage I would swap over the main and alternate daily wave counts.

S&P 500 hourly 2013

Although yesterday’s alternate expected a combination or double flat for minor wave 4, this is not how it subdivides. Upwards movement at the beginning of Wednesday’s session looks more like a fourth wave within the downwards impulse of minute wave c.

Minor wave 4 now fits perfectly within the channel about intermediate wave (5) which I have copied over here to the hourly chart. It now lasts five days which is closer to minor wave 2 at six days. The proportions are excellent. There is alternation between minor waves 2 and 4; minor wave 2 was a zigzag and minor wave 4 is an expanded flat.

Minor wave 4 still subdivides best as an expanded flat correction. Within it minute wave b is a 190% correction of minute wave a. There is no Fibonacci ratio between minute waves a and c.

Ratios within minute wave c are: there is no Fibonacci ratio between minuette waves (iii) and (i), and minuette wave (v) is 1.46 points short of equality with minuette wave (iii).

Within minute wave c there is alternation between minuette waves (ii) and (iv); minuette wave (ii) is a deep 67% zigzag, and minuette wave (iv) is a more shallow 54% expanded flat correction.

A clear channel breach of the downwards green sloping channel about minute wave c would provide me with confidence that minor wave 4 is over and minor wave 5 is underway.

Within minor wave 5 no second wave correction may move beyond the start of its first wave. This wave count is invalidated with movement below 1,779.09.

Alternate Bullish Wave Count.

S&P 500 daily alternate 2013

It is possible that a new cycle degree bull market began at 666.79. So far it is not yet halfway through, and I would expect it to last for a few years (at least five more years and maybe longer).

At some stage then the current upwards impulse, labeled intermediate wave (5) for the main wave count and minor wave 5 for this alternate, will be completed. At that stage both wave counts would expect a trend change. The main wave count would expect a huge cycle degree trend change, and this alternate would expect an intermediate degree trend change. If the downwards movement subdivides as a three and remains within the maroon channel then this alternate would be preferred. If it breaches the channel this alternate would be discarded.

The maroon – – – channel is an acceleration channel drawn about primary waves 1 and 2 on the monthly chart (it is drawn in exactly the same way on the main wave count, but there it is termed a corrective channel). I would not expect intermediate wave (2) to breach this channel because a lower degree (intermediate) wave should not breach an acceleration channel of a higher degree (primary) first and second wave.

The daily chart shows the structure of minor wave 5. It is incomplete. Targets are the same because they are calculated using the same wave lengths as the main wave count. This bullish alternate does not diverge from the main wave count at this stage, and it will not for some weeks (or months) to come.