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Elliott Wave chart analysis for the SPX500 for 7th October, 2010. Please click on the charts below to enlarge.

This is a brief analysis of the New York session for Thursday while I am in Los Angeles. The end of week analysis will be the usual text and video.

SPX500 daily 2010

The S&P has moved up a little to a new high exactly as expected. Target #1 was at 1,167.2 and upwards movement ended at 1,167.4. Thereafter, price has turned back down.

Again, it is now possible to see a complete and satisfactory five wave structure within wave C pink to end this second wave correction.

If wave 2 blue was over here it is a 75% correction of wave 1 blue.

Within wave 2 blue wave C pink is 7.1 points longer than equality with wave A pink and we now can see a very nice small overshoot of the upper blue trend line containing wave 2 blue.

If it was over on the 6th of October then neither wave 2 blue nor C pink have a fibonacci time duration.

If this wave count is invalidated with upwards movement above 1,167.4 then we may expect price to rise quite a lot higher. For this wave count the maximum upwards price point is 1,183.4 where wave 5 green reaches equality with wave 3 green, as wave 3 cannot be the shortest.

We need to see a full daily bar opening and closing below the lower edge of the small pink parallel trend channel containing wave C pink as confirmation of a trend change. The safest approach to this market is to be patient and wait for this confirmation before entering short positions. If price moves higher (above 1,167.4) and you wish to trade to the upside please be careful and use stops, as the next move for the S&P is very strong downwards movement.

SPX500 hourly 2010

Price stayed above our invalidation point of 1,154.4 and moved up to just above our first target.

So far the S&P is behaving exactly as expected for this wave count.

If this wave count is correct we should see strong downwards movement. Price must remain below the last high of 1,167.4.

If this labeling of recent downwards movement is correct then price should remain below 1,161.6 also. However, this labeling may be premature.

We must see movement below the start of wave 5 green at 1,121.9 for our confirmation of this major trend change.

Alternatively it is also possible that we could move the degree of labeling within wave 5 green here on the hourly chart all down one degree. We may have only seen wave 1 of wave 5 green. If this alternate possibility plays out then the next move for the S&P is a third wave to the upside. We will know if this is possible as soon as price moves to a new high. Therefore, if this wave count is invalidated we may expect price to move considerably higher. In this event I will calculate targets for you in the next analysis. This could see the S&P reach its final high for wave 2 blue on the 13th to 15th of October next week where wave C pink will have lasted a fibonacci 34 days.