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Elliott Wave chart analysis for the SPX500 for 12th October, 2010. Please click on the charts below to enlarge.

SPX500 daily 2010

Yesterday’s upwards movement invalidated the alternate wave count. The main wave count is correct and price is now within the target zone.

I have adjusted the main wave count, within wave C pink, today. This wave count has better fibonacci ratios than yesterday’s interpretation, and perhaps a better look also.

Ratios within wave C pink are: wave 3 green is just 1.9 points short of equality with wave 1 green. Wave 5 green therefore cannot be longer than 3 green and upwards movement is limited to no higher than 1,198.7.

If wave C pink ends with one more trading day to the upside it will have a fibonacci time relationship. The next probable end to upwards movement therefore could be October 13th, 14th or 15th.

The upper blue trend line of the parallel channel containing wave 2 blue is now providing support for downwards movement. There is a clear overshoot of this blue trend channel which is very common for C waves.

We will use the smaller pink parallel channel for indication of a trend change. When we have a full candlestick outside the lower edge of the parallel channel we will have confirmation of our trend change. Confirmation will also come with movement below 1,131.4.

SPX500 hourly 2010

The hourly chart shows all of green wave 5.

Within green wave 5, orange wave 5 will reach equality with orange wave 3 at 1,179.4. This is our target.

Ratios within orange wave 1 are: purple wave 3 is just 0.9 points short of 1.618 the length of purple wave 1 and purple wave 5 is just 0.3 points longer than equality with purple wave 1.

Ratios within orange wave 3 are: purple wave 3 is 3.4 points short of 4.236 the length of purple wave 1 and purple wave 5 is just 1.1 points short of 0.618 the length of purple wave 3.

Within orange wave 5 purple wave 3 passed equality with purple wave 1 at 1,174.3. About this point we may see downwards movement for a fourth wave at purple degree which may not move into wave 1 purple price territory below 1,168.6.

When the downwards purple fourth wave correction is over one more push upwards for a fifth wave may end upwards movement.

At that stage we will again be at a critical stage for the S&P. We will have a complete impulse structure to the upside so upwards movement could be over.

While price remains above 1,131.4 the possibility of further upwards movement to a maximum at 1,198.7 will remain. We need to see movement below this point to eliminate the possibility of further upwards movement.