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Elliott Wave chart analysis for the SPX500 for 15th October, 2010. Please click on the charts below to enlarge.

SPX500 daily 2010

Friday’s downwards movement was not deep enough to provide confirmation of a trend change. We still have the two wave counts for the S&P to end the trading week.

One more day’s upwards movement would see wave C pink still with a fibonacci time relationship. If the high does not occur then the next opportunity for a fibonacci time relationship would be in another 21 trading days. This seems highly unlikely.

We can see reasonable divergence between price trending higher and MACD trending lower on 2 and 8 hourly charts for wave C pink. This trend is expiring.

To confirm a trend change at minor degree we need to see a full candlestick below the small pink parallel trend channel on the daily chart. Price movement below 1,131.4 will provide further confirmation of a trend change but this will most likely come after a trend channel breach which is significant enough to provide confirmation on it’s own.

Main Wave Count

SPX500 hourly 2010

The main wave count expected upwards movement to 1,182.1 to end a second wave correction. This upwards movement ended just 1.2 points above the target. Thereafter, price turned back downwards.

Ratios within wave 2 orange are: wave B purple is a 45% correction of wave A purple and wave C purple is just 1.2 points longer than 0.618 the length of wave A purple.

Within wave 3 orange downwards the S&P should open slightly higher to complete wave C aqua of wave 2 purple. A target for the end to wave 2 purple is at 1,177.3. Upwards movement should not move above 1,183.3 as wave 2 purple cannot move beyond the start of wave 1 purple.

Thereafter, if this wave count is correct, the S&P should turn strongly downwards.

If upwards movement moves above 1,184.3 this wave count will be invalid. The alternate wave count will then explain movement.

Alternate Wave Count

SPX500 hourly 2010

The alternate wave count is still valid. While price remains within the pink parallel channel on the daily chart further upwards movement to new highs will remain a possibility.

Recent movement can be counted as an expanded flat correction for wave 2 red. Ratios within wave 2 red are: wave B olive is a 156% correction of wave A olive and wave C olive is just 0.5 points longer than 2.618 the length of wave A olive.

If this wave count is correct price should not move below 1,166.6. Movement below this point will invalidate this wave count but it is not confirmation of a trend change at minor degree.

A third wave to the upside should quickly take price to new highs above 1,184.3. At this point this wave count would be confirmed.

At 1,193.1 wave 5 orange will reach 4.236 the length of wave 1 orange.

At 1,198.7 wave 5 green will reach equality with wave 3 green, which is also a maximum allowable upwards limit for this wave count.