Last analysis expected Friday to at least begin with lower movement towards a short term target at 1,802, and to most likely complete a red candlestick on the daily chart. This is not what happened. Price moved higher.

The bearish alternate is invalidated. The main wave count is correct.

Click on the charts below to enlarge.

This wave count has a higher probability than the bullish 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.

We should always assume the trend remains the same, until proven otherwise. This is a huge trend change. I will assume we are yet to see new highs while price remains above 1,646.47.

Minor waves 1 and now also 2 are most likely complete. Minor wave 3 upwards may have begun. I have drawn an acceleration channel about minor waves 1 and 2. Minor wave 3 upwards should break through resistance at the upper trend line. The lower trend line should provide support for corrections within minor wave 3.

At 1,870 minor wave 3 would reach 0.618 the length of minor wave 1. I am using this Fibonacci ratio to calculate the target because minor wave 1 is extended, and so minor wave 3 may not be. We may be about to see a larger fractal at minor wave degree of the structure within minor wave 1 at minute wave degree; there the first wave was extended, the third wave was shorter, and the fifth wave was shorter still.

However, the structure unfolding on the hourly chart suggests that 1,870 may be too high. When there is more structure on the hourly chart I will recalculate the target at minute wave degree. I cannot do that yet. This target may change.

Intermediate wave (3) is just 0.76 points short of 2.618 the length of intermediate wave (1). We may not see a Fibonacci ratio between intermediate wave (5) and either of (3) or (1).

Intermediate wave (1) lasted 18 days. So far intermediate wave (5) has lasted 53 days. If it is continuing it may last a total of a Fibonacci 89 days which would see it end on 10th February, 2014. However, Fibonacci time relationships are not very reliable for the S&P. This is a rough guideline only,

At super cycle degree the structure is an expanded flat correction. Within the flat the maximum common length of cycle wave b is 138% the length of cycle wave a, and this is achieved at 1,858.03. When cycle wave b is longer than the common length of cycle wave a then the probability that an expanded flat is unfolding would reduce and it would be more likely that a long term bull market is underway. Above 1,858.03 I will swap this main wave count over with the bullish alternate.

Minute wave ii was complete. Minute wave iii moved price higher during Friday and showed an increase in upwards momentum.

Minor wave 3 should breach the upper edge of the blue channel copied over here from the daily chart; third waves should breach acceleration channels.

Within minute wave iii minuette waves (i), (ii), (iii), and most likely also minuette wave (iv) are complete. On the five minute chart the a and c waves within minuette wave (iv) are almost perfectly equal in length.

At 1,827 minuette wave (v) would reach equality in length with minuette wave (i). At 1,828 minute wave iii would reach 0.618 the length of minute wave i.

This target should be met on Monday.

I have drawn a small parallel channel about minute wave iii. I would expect minuette wave (v) to be likely to end at the upper trend line. When this channel is breached by subsequent downwards movement then minute wave iii should be over and minute wave iv should be underway.

Thereafter, I would expect downwards movement for minute wave iv. It is most likely to be a zigzag, and reach down to either 0.382 or 0.618 the length of minute wave iii.

Minute wave iv may not move into minute wave i price territory. This wave count is invalidated with movement below 1,811.08.

Bullish Alternate Wave Count.

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 probably longer).

The current upwards impulse, labeled intermediate wave (5) for the main wave count and minor wave 5 for this alternate is incomplete. The structure within the final fifth wave is the same, and the structure on the hourly chart is the same. Targets would be the same for this bullish wave count. This wave count again does not diverge with the main wave count, and it will not for several weeks or a a couple of months or so yet.

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.