Elliott Wave chart analysis for the SPX500 for 3rd November, 2010. Please click on the charts below to enlarge.
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.
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.
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.
Another interesting thing is that the NDX (Naz 100) is just 46 points away from it’s Oct. 2007 high.
We must be in the mother of all bull markets!
The S&P has just invalidated the wave count. I have already updated the historical monthly and weekly charts, both text and video, this morning. I expect the S&P will continue somewhat higher and I have targets on the historical analysis for you.
Expect the trend to continue up until proven otherwise, and we have not had a trend change confirmed as yet.
Do you think the dollar has bottomed yet?
No.
Hi Laura- I have yet to give up on the SPX cash index. It has yet to breach and seems to be a 5th wave out of a barrier triangle. It could also be interpreted as a 5th wave of an ending diagonal although it’s looking a bit extended. However, if this is the case, wave 5 would equal wave 3 of the diagonal at just about exactly where the breach would be made.
I don’t know if any of this makes sense and I don’t have time to send charts. But if the SPX cash breaches we are still going to have a correction to this rally as it is seriously overbought and we still have a daily divergence in MacD and stochastics.
We will see.
Thank you for your consideration.
Bob
sorry, but one last comment. the Dow futures have long since breached what we consider wave 1 for the SPX. This holds true for the SPX futures and the cash index as well. Doesn’t this present something of a conundrum when looking at the markets?
very best regards,
robert
The Dow has broken through it’s invalidation point. It is in a C wave to the upside, and has a way to go now. I would expect the S&P to also breach it’s high at 1,220 and go a fair way higher.
The only thing that now makes more sense is that Primary 2 now has A-B and now is in C. A is a clear 5 wave structure, so instead of counting it W-X-Y-X-Z it is a 1-2-3-4-5. That looks better.
However now we have the volatile downwards movement including the day of the “fat finger” as a B wave which does not make as much sense.
So we can now expect that we are a way off the turning point for the S&P. Until a trend change is confirmed we have to continue to assume that the trend is up.
it’s a bit like torture watching this thing play around at the very summit of wave 1. LOL.
we are very close to invalidating all presumed wave 2 counts. in the event that this happens, and in the ES-Mini we are but .75 from breaching the top of wave 1, i suppose we are back to the drawing board.
in any event this still appears to be a fading rally. all indicators and technicals are pointing to some kind of reversal. but wouldn’t a breach of 1 imply that our upside could potentially be all the way up to the high of Oct 2007 and last indefinitely.