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Elliott Wave chart analysis for the S&P 500 for 26th August, 2011. Please click on the charts below to enlarge.

S&P 500 daily alternate 2011

It is possible that primary wave 1 is over and recent upwards movement is black wave (A) within primary wave 2.

If price moves above 1,208.47 in the next couple of days in strong upwards movement this will be our only wave count. At that stage both wave counts for the main daily chart will be invalidated.

This wave count sees waves (4) and (5) black both over, and wave (5) black truncated. This could have happened after that particularly strong third wave down moved price “too far too fast”.

It sees remarkably brief fourth and fifth waves and, along with the truncation, this is why I have not previously published this wave count.

I think we should only use it if it is shown to be correct with price movement above 1,208.47.

S&P 500 hourly alternate 2011

The important implication of this wave count is that it is expecting a third wave of a third wave upwards to begin probably on Monday.

Because we don’t know exactly where wave ii pink has ended we cannot calculate a target for wave iii pink. We may expect wave iii pink to most likely be 1.618 the length of wave i pink which would see it 112.60 points in length.

Wave ii pink may not move beyond the start of wave i pink. This wave count is invalidated with movement below 1,135.91.