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Elliott Wave chart analysis for the SPX500 for 3rd November, 2010. Please click on the charts below to enlarge.

SPX500 daily 2010

As expected from yesterday’s analysis the S&P has moved slightly higher. We still have divergence with price trending higher and MACD trending lower on hourly, 2 hourly, 4 hourly, and 8 hourly charts. This is an expiring trend.

However, we do not have a confirmed trend change while price remains above 1,158.9 and within the pink parallel trend channel containing wave C pink upwards. When we can see a full candlestick outside and below the pink parallel channel then we will have confirmation that this trend has changed from up to down.

Wave 2 blue cannot move beyond the start of wave 1. Therefore, upwards movement may not move above 1,220 for this wave count.

Main Wave Count.

SPX500 hourly 2010

Upwards movement has a strong overlapping look. This is typical of a diagonal. Ending diagonals require all subwaves to be zigzags and all these upwards waves certainly may be seen as zigzags.

This is an expanding diagonal: wave 4 is longer than 2, wave 3 is longer than 1 and wave 5 is longer than 3. This structure meets all rules and guidelines.

We will have initial confirmation that the trend may have changed when price moves below 1,182.4. When price moves below 1,158.9 then we will have final confirmation that the trend has changed to down. Until we have confirmation of a trend change we must assume that the trend is up. However, there is not a lot of room now for upwards movement.

Alternate Wave Count.

SPX500 hourly 2010

This wave count is looking even less likely today. It is technically possible but it requires room for development of a series of third and fourth waves which do not move into these wave 1 price territories. It may require more upwards room than that which is available.

This wave count will be invalidated with movement below 1,182.4 as any first wave within wave 3 red may not move beyond the start of its first.

At 1,208.3 wave 3 orange will reach equality with wave 1 orange.