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Elliott Wave chart analysis for the SPX500 for 7th January, 2011. Please click on the charts below to enlarge.

SPX500 daily 2011

As expected from last analysis the S&P has moved higher.

At this stage the wave structure for upward movement is almost complete. One final zigzag upward on the hourly chart is all that is required to complete it.

At 1,285.7 wave 5 orange within wave 5 green will reach equality with wave 3 orange and at 1,287.4 wave 5 green will reach equality with wave 1 green. This is our target zone for upward movement to end.

The next movement should be down and we should be expecting a trend change at least at minute (pink) degree. If we move the degree of labeling for movement since the end of wave 4 blue up one degree then this trend change to come may be at primary degree. This possibility is presented below.

Movement below 1,172.6 will invalidate this wave count as pink wave 2 may not move beyond the start of pink wave 1. At that point we may have reasonable confidence that primary wave 2 is over and primary wave 3 would be underway.

SPX500 daily 2011

If we are seeing the end of blue wave 5 then I would expect it to move higher than if this wave is just pink wave 2.

At 1,309.2 green wave 5 will reach 0.618 the length of green wave 3. At 1,349.9 black wave C would reach 0.618 the length of black wave A. There would be no fibonacci ratio between blue wave 5 and either 1 or 3 blue.

This wave count would be confirmed below 1,172.6 as that is where our first wave count would be invalidated.

The hourly chart below will suffice for both these daily interpretations. Only the degree of labeling would differ.

SPX500 hourly 2011

So far this structure is unfolding as expected. We should see one final zigzag to the upside which should be longer than wave 3 orange. Wave 5 orange will reach equality with wave 3 orange at 1,285.7. Therefore, it is highly likely that this lower end of the target zone will be reached.

Within this ending diagonal wave 2 orange was a 73% correction of wave 1 orange and wave 4 orange was a 93% correction of wave 3 orange.

There is no maximum limit to wave 5 orange.

Movement below 1,261.4 before wave 5 orange is complete would invalidate this structure.

Movement below 1,253.4 will confirm a trend change at least at minute (pink) degree as at that stage downward movement may not be a second wave correction within wave 5 orange.