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Elliott Wave chart analysis for the SPX500 for 2nd March, 2011. Please click on the charts below to enlarge.

SPX500 daily 2011

The S&P behaved mostly as expected yesterday, moving downward to end 0.7 short of the target calculated then moving upward in choppy overlapping corrective movement.

When this correction is over the strong downward movement should resume.

The trend change is looking more likely. Movement below the trend channel containing wave 5 blue (pink lines) will provide an indication of a trend change. Movement below 1,265.1 may be considered confirmation of a trend change.

SPX500 hourly 2011

We have another clear five wave structure downward complete on the hourly chart now.

Ratios within wave 1 green are: wave 4 orange is just 1.4 points short of 4.236 the length of wave 1 orange and there is no fibonacci ratio between wave 5 orange and either 1 or 3.

Within wave 2 green wave C orange is just 0.6 points longer than 1.618 the length of wave A orange. Wave 2 green may have been over here, and it is most likely that it was. The most likely next direction for the S&P should be strong downward movement in a third wave at green degree of a third wave at pink degree.

Any second wave correction within wave 3 green may not move beyond the start of the first. Therefore, this wave count is invalidated with movement above 1,314.4.

In the first instance we may expect this next strong wave down to take price to about 1,274.2 where wave 3 green will reach equality with wave 1 green.

Thereafter, a fourth wave correction may not move above 1,296.9.

However, although wave 2 green is labeled here as complete we must also consider the possibility that only wave A of wave 2 green is complete. This alternate is charted below.

Alternate Hourly Wave Count.

SPX500 hourly 2011

Wave 2 green may be unfolding as a flat correction with wave A orange a three wave structure.

Wave B of a flat must reach at least 90% the length of wave A. This is achieved at 1,298.65.

The most common type of flat is an expanded flat which requires wave B to be at least 105% the length of wave A. This is achieved at 1,296.01.

If downward movement ends about this target zone and it looks corrective and subdivides into a three wave structure, then it is likely to be a B wave and we should then expect wave C to take price above 1,314.4 (highly likely).

Wave 2 green may not move beyond the start of wave 1 green. Therefore, this wave count is invalidated with movement above 1,337.10.