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With a new high above 1,367.76 the S&P 500 confirmed our main hourly wave count and invalidated our alternate.

We have just one hourly wave count to end the trading week.

We should expect this trend to continue towards our target. As more structure unfolds I will recalculate and reduce the target zone.

Click on the charts below to enlarge.

S&P 500 daily 2012

This main wave count follows on from our main historic monthly chart. It sees a flat correction at primary degree unfolding, and wave (B) black within that flat correction is probably within its last upwards wave and may end within the next 2 to 4 weeks (about).

Waves a and b pink within wave Y blue lasted a Fibonacci 8 days. Wave c pink is much longer, so far at 45 days. The next number in the Fibonacci sequence is 55, and wave c pink could possibly last another 10 trading days ending on the 9th of March, 2012 (give or take one day either side of this date). Please be aware this is a rough guideline only. While Fibonacci price ratios are commonly seen, Fibonacci time relationships are less reliable.

Wave (B) black is here labeled as a double zigzag, which is a relatively common structure. When the second zigzag labeled wave Y blue is complete the probability that wave (B) black is complete will be very high indeed. The only wave wave (B) black could continue further would be as a rare triple zigzag and the rarity of this structure means it has a very low probability.

Wave (B) black may move beyond the start of wave (A) black, and in fact for flat corrections this is most common. The maximum common length of B in relation to A within a flat is 138%. This would be achieved at 1,459. It is likely we shall see a trend change before this price point.

We may use Elliott’s channeling technique to draw a channel about wave Y blue. When this channel is breached by a full daily candlestick below it then we shall have strong confirmation of a trend change.

Wave (C) black is extremely likely to take price below the end of wave (A) black at 1,074.77.

S&P 500 hourly 2012

Wave v orange is incomplete and this wave count requires further upwards movement.

Within wave v orange waves 1 and 2 purple are complete. Wave 3 purple is incomplete.

At 1,378 wave c pink will reach 1.618 the length of wave a pink. At 1,385 wave v orange would reach equality in length with wave iii orange. This gives us a 7 point target zone.

When waves 3 and 4 purple within wave v orange are complete I will use Fibonacci ratios at purple degree to try to narrow down this target range.

Within wave 3 purple I have determined this labeling after looking at subdivisions on the 5 minute chart. Waves (1), (2), (3) and most probably (4) aqua are complete. Importantly wave (3) aqua is a little shorter than wave (1) aqua. Because wave 3 can never be the shortest wave this limits wave (5) aqua to no longer than 1,373.24.

I will leave the invalidation point now at the start of wave 3 purple. Within wave 3 purple no second wave correction may move beyond the start of its first wave, and this wave count is invalidated with movement below 1,352.28.

If this degree of labeling within wave 3 purple is correct then wave (4) aqua may not move into wave (1) aqua price territory. This labeling within wave 3 purple is invalidated with price movement below 1,362.46.

When wave (5) aqua upwards completes wave 3 purple then we may move the invalidation point up to the high of wave 1 purple at 1,367.76. Wave 4 purple may not move into wave 1 purple price territory.

Alternate Daily Wave Count.

S&P 500 daily alternate 2012

This alternate has a lower probability than the main daily chart.

If the upwards wave labeled here A blue was a five, and not a three, then wave (B) black is a single zigzag. Wave C blue is incomplete.

The subdivision of wave A blue as a five is not nearly as satisfactory as seeing it as a three, which the main wave count does. This is the reason why this alternate has a much lower probability.

It looks increasingly like wave iii pink would be incomplete. When wave iv pink begins we would expect it to last one to two weeks and be a relatively shallow correction of wave iii pink. It should look about equal in duration to wave ii pink.

Wave iv pink may not move into wave i pink price territory and this wave count is invalidated with movement below 1,267.06.