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Elliott Wave chart analysis for the SPX500 for 12th January, 2011. Please click on the charts below to enlarge.

SPX500 daily 2011

The S&P has behaved exactly as expected for last session and is now within the target zone.

The structure for this last wave upward is incomplete. It requires one small and final upward wave at aqua degree. Thereafter, we will have a complete and satisfactory ending diagonal for wave 5 green which meets all rules and guidelines. At that stage we may see a trend change which may be at minute degree, or possibly at primary degree.

The degree of labeling here expects the next move down will be a second wave at minute degree. Wave 2 pink may not move beyond the start of wave 1 pink. Therefore, this wave count is invalidated with movement below 1,172.6. When we have a complete structure upward for wave 5 green then we should draw a fibonacci retracement from the low labeled 4 blue on the daily chart here, up to the high. We may use the 0.618 fibonacci ratio of wave 1 pink as the most likely point for wave 2 pink to end.

When wave 2 pink is over this wave count sees further upward movement and new highs for the S&P toward a most likely target of 1,561.2 where wave C black will reach equality with wave 1 black.

If downward movement that we are expecting takes price below 1,172.6 then the trend change was most likely at primary degree. At that stage we should use the alternate degree of labeling below.

SPX500 daily 2011

If the trend change that we are expecting is at primary degree then downward movement may be very strong, even volatile.

Primary wave 3 may take over a year to complete and it must take price below 666.80.

We will know fully and finally that primary wave 3 is underway if price moves below 1,121.9 as at that stage downward movement may not be a fourth wave correction (although that would leave wave 3 blue on the daily chart as having a very strong three wave look). If price moves below 1,172.6 then the probability that it will continue below 1,121.9 may be considered very high indeed, at this stage.

SPX500 hourly 2011

Recent upward movement was exactly as expected.

Wave 3 aqua has no fibonacci ratio to wave 1 aqua.

Ratios within wave 3 aqua are: wave 3 red is 2.3 points longer than 1.618 the length of wave 1 red and wave 5 red is 0.9 points short of 0.618 the length of wave 1 red.

Ratios within wave 3 red are: wave 3 teal has no fibonacci ratio to wave 1 teal and wave 5 teal is 0.4 points longer than 0.618 the length of wave 3 teal.

Ratios within wave 3 teal are: wave 3 maroon is 0.59 points short of 4.236 the length of wave 1 maroon and wave 5 maroon is 0.5 points short of 0.382 the length of wave 3 maroon.

Wave 4 aqua is most likely to correct to about the fourth wave of one lesser degree at 1,282.9. Thereafter, we should see one final upward wave, which may not even show subdivisions on the hourly chart.

Wave 5 aqua to end this movement may be expected to be only 6 points, or less.

We still need to be patient to wait for movement below 1,253.4, however, to confirm a trend change. If we move the labeling of upward movement for wave 5 green all down one degree, then we may only be seeing the end of wave 1 orange within wave 5 green.

Wave 2 cannot move beyond the start of wave 1 below 1,253.4. This is why this price point will provide trend change confirmation.