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Elliott Wave chart analysis for the S&P 500 for 12th April, 2011. Please click on the charts below to enlarge.

S&P 500 daily 2011

Yesterday’s movement below 1,321.06 invalidated the main hourly wave count and confirmed the alternate count.

It is possible now to see a clear five wave structure from the low labeled 4 blue on upwards. It is just technically possible that wave 5 blue and therefore primary wave 2 is over, but I have reservations about this possibility.

A truncation for the fifth wave at blue degree reduces the probability that it was over here. Also, wave behaviour does not yet support this idea. When primary wave 3 arrives we may expect it to exhibit very strong, even violent, downwards movement. We have not seen that these last few days.

At this stage what looks more likely is that we have had an end to a minute (pink) degree first wave and the S&P is currently within a second wave correction.

We may use the invalidation point of this wave count, 1,249.05, as an indicator for primary wave 3. Wave 2 pink may not move beyond the start of wave 1 pink. Movement below this point would provide strong indication that primary wave 3 had arrived.

S&P 500 hourly 2011

I have adjusted the wave count slightly from yesterday. This wave count fits subdivisions as seen on a 15 minute chart much better and resolves two problems I had with yesterday’s count.

Ratios within wave 1 pink are: wave 3 green is 1.24 points short of 1.618 the length of wave 1 green and wave 5 green is 2.01 points short of 0.236 the length of wave 3 green.

Wave 1 green is a leading expanding diagonal and wave 5 green is an ending expanding diagonal.

Wave A green of wave 2 pink is most likely unfolding as a leading expanding diagonal because the subdivision of wave 1 orange within it looks most like a zigzag on the 15 minute chart.

Wave 4 of a diagonal should overlap into wave 1 price territory. So wave 4 orange should move up to at least 1,322.94. Wave 4 of a diagonal may not move beyond the end of wave 2. Movement above 1,333.77 for wave 4 orange would invalidate this wave count.

At this early stage we may expect wave 2 pink to correct to about the 0.618 fibonacci ratio of wave 1 pink about 1,283.59.

Wave 2 may not move beyond the start of wave 1. This wave count is invalidated with movement below 1,249.05