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Elliott Wave chart analysis for the SPX500 for 20th October, 2010. Please click on the charts below to enlarge.

SPX500 daily 2010

After hours movement has invalidated the main wave count with a very slightly new high. At the time of this analysis the new high was 1,185.6.

I have re-analysed the alternate wave count again. It remains valid but I’m returning to another alternate we have used before which may be more probable. This wave count does not require significant upwards movement.

With a new high on the 20th of October wave C pink can now have no fibonacci time relationship. If upwards movement continues, slowly, the next opportunity for a fibonacci time relationship will be on the 5th of November, where wave 2 blue will last a fibonacci 89 days (give or take 2 days either side of this date).

Wave 5 green cannot be longer than wave 3 green and because wave 3 green is slightly shorter than wave 1 green, and wave 3 cannot be the shortest, upwards movement is limited to no higher than 1,198.7 for this wave count.

SPX500 hourly 2010

This 2 hourly chart details all of wave 5 green from its start at 1,131.4.

There is no fibonacci ratio between waves 1 and 3 orange. At 1,188.7 wave 5 orange will reach 0.618 the length of wave 3 orange. This is the upper end of our target zone.

This wave count meets all rules and many guidelines. I do not like the very small length of waves 1 and 2 orange in relation to waves 3 and 4 orange, although first and second waves of an impulse can be brief. Within wave 4 purple there is a slightly truncated C wave and also to end wave 3 purple wave 5 aqua is slightly truncated. Wave C aqua to end wave 2 purple can be seen as a five wave structure on a 15 minute chart, but this count at this small point seems forced.

Overall this wave count is the best fit I can see for recent upwards movement. Yesterday’s alternate remains valid so we should keep in mind its implication: that price has further upwards to go to end this upward trend. However, the limit of 1,198.7 remains the same.

Wave 3 purple is just 2.8 points short of 2.618 the length of wave 1 purple.

At 1,183.9 wave 5 purple will reach equality with wave 1 purple. This is the lower end of our target zone.

Upwards movement cannot move above 1,198.7.

SPX500 hourly 2010

Within wave 5 purple to the upside we have probably just finished the third wave. We should have one more push upwards towards the target zone to end this fifth wave before price turns back down.

The highs are getting shallower. There is still divergence between price trending higher and MACD trending lower.

With this wave count our important price point to confirm a big trend change returns to 1,131.4. We still need confirmation of a trend change by a breach of the trend channel on the daily chart. When we can see a full candlestick outside the lower edge of the pink parallel channel on the daily chart then we will have confirmation of a trend change at minor degree. This will likely come before price moves below 1,131.4.