Elliott Wave chart analysis for the S&P 500 for 13th December, 2011. Please click on the charts below to enlarge.
Movement to a new low below 1,227.75 has indicated that wave b pink was incomplete. At this stage it looks most likely that the lower probability possibility, that wave b pink would continue further as a double correction, is unfolding. Wave b pink looks like it is unfolding as a double zigzag structure, which may be very nearly complete.
When wave b pink is complete then we may again calculate targets for wave c pink upwards to complete the second zigzag for wave Y blue. At this stage the structure of wave b pink does not look complete and it is premature to calculate targets. We may be able to do that after one more session.
Wave b pink may not move beyond the start of wave a pink. This wave count is invalidated with movement below 1,158.66.
Wave (2) black may not move beyond the start of wave (1) black. This wave count is invalidated with movement above 1,359.44.
Wave b pink is extending lower as a double zigzag structure. We did not see a clear five up on the hourly chart which was required to reinforce yesterday’s hourly analysis. We only saw three up which was followed quickly by a new low.
Wave b pink so far has lasted 4 days. With one more day of a little more downwards movement it would have lasted a Fibonacci 5 days. It may end after one more day.
On the 5 minute chart the structure of wave c orange within wave (y) green is incomplete. It requires a final fifth wave downwards. At 1,211 wave 5 within wave c orange would reach equality with wave 1. At 1,212 wave c orange would reach 2.618 the length of wave a orange. This gives us a one point target zone for downwards movement to end. It should end within tomorrow’s session.
Within the structure of wave c orange the first wave ends at 1,230.75 and the structure is clearly an impulse and cannot be a diagonal. Movement above 1,230.75 would indicate that wave c orange is complete and therefore that wave (y) green zigzag should also be complete.
Wave b pink may not move beyond the start of wave a pink. This wave count is invalidated with movement below 1,158.66.
The only possibility that allows for greater downwards movement to be more long lasting is unlikely. Wave b pink could continue yet further as a triple zigzag, but these structures are very rare and have a very low probability. When wave (y) green is complete the probability that price will turn upwards to make new highs is very high indeed.
Alternate Wave Count.
This wave count has a low probability because wave C blue within the zigzag for wave (2) black is severely truncated. However, the subdivisions fit.
Only if we saw very strong downwards movement from this point below 1,158.66 would we need to use this wave count. At that stage it would provide a valid explanation.
Within wave (3) black no second wave correction may move beyond the start of the first wave. This wave count is invalidated with movement above 1,267.06. If this wave count is invalidated by upwards movement then our main wave count could be considered confirmed.
Second Alternate Wave Count.
There are four reasons why I consider this wave count to have the lowest probability:
1. wave iv pink is not an obvious zigzag and it should be.
2. wave iv pink is already deeper than 0.81 of wave iii pink; this is the maximum common length for wave 4 within a diagonal in relation to wave 3.
3. while leading diagonals are not uncommon, leading expanding diagonals are supposedly less common structures.
4. a similar wave count on the Dow is invalidated; the Dow and S&P 500 have been moving together nicely for some time and it would be highly unusual for them to now diverge.
Within the leading diagonal for wave 1 blue wave iv pink may not move beyond the end of wave ii pink. This wave count is invalidated with movement above 1,277.55.
A leading diagonal may not have a truncated fifth wave. This wave count requires movement below 1,158.66 to remain valid.