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The S&P closed slightly lower for Wednesday’s session, but it was not the downwards movement we were expecting. This small degree fourth wave correction looks like it is taking longer than originally anticipated, but the structure is definitely corrective.

We have again only one daily and one hourly wave count. There are a couple of very low probability structures which could unfold in the very short term on the hourly chart, and these are discussed briefly with the hourly chart analysis. Only the highest probability structure is charted to keep things simple.

Click on the charts below to enlarge.

S&P 500 daily 2012

This wave count sees the S&P 500 as within a final fifth wave upwards to complete a large correction at intermediate (black) degree. If wave Y blue is to have a Fibonacci time relationship then it may take another 10 sessions to complete, lasting a Fibonacci 89 days. Please note though that Fibonacci time relationships are not as reliable as price ratios, and this expectation of another 10 sessions is a rough guide only.

Wave (B) black is correcting the three wave structure of wave (A) black within a flat correction at primary degree. The maximum common length for wave (B) black in relation to wave (A) black is 138%. This would be achieved at 1,464 and it is likely we shall see a trend change before this price point is reached.

At 1,432 wave (v) green would reach 0.618 the length of wave (iii) green. This is our first target for upwards movement to end.

If price continues through the first target, and the structure requires further upwards movement to complete it, the second target is at 1,445 where wave (v) green would reach 2.618 the length of wave (i) green.

Within wave (v) green no second wave correction may move beyond the start of the first wave. This wave count is invalidated with movement below 1,340.03.

We should keep drawing the parallel channel on the daily chart about the zigzag of wave Y blue. Draw the first trend line from the start of Y blue to the low labeled b pink, then place a parallel copy on the high of a pink. Only when this channel is breached by a full daily candlestick below it shall we have confirmation of a big trend change, and until that time we should expect upwards movement to continue.

S&P 500 hourly 2012

Price moved mostly sideways for Wednesday’s session, and we did not see the downwards movement we were expecting. I expect this is wave B purple continuing further sideways.

Within wave B purple wave (A) aqua subdivides on the 5 minute chart into a nice five wave impulse, with the final fifth wave completing at the start of Wednesday’s session.

Wave (B) aqua is a very clear three on both the 5 minute and 1 minute charts, and this cannot be seen any other way.

Wave (C) aqua is an incomplete structure. On the 5 and 1 minute charts it subdivides so far into 5-3-3-5 which is followed by a flat correction. There is no known Elliott Wave structure which could be complete with these subdivisions and I therefore expect this structure to continue to move higher tomorrow.

Wave (C) aqua may end about the upper edge of the small aqua parallel channel drawn using Elliott’s technique about B purple. At 1,411 wave (C) aqua would reach equality in length with wave (A) aqua.

Thereafter, wave C purple downwards should unfold.

When we know where B purple has ended we may use ratios between A and C purple to calculate a target again for C purple to end. At this stage we shall again expect C purple to reach down to the 0.618 Fibonacci ratio of iii orange at 1,384.

Given the guideline of alternation we are expecting this fourth wave for iv orange to be a relatively deep correction of iii orange, because wave ii orange was such a shallow correction of wave i orange.

Wave iv orange may not move into wave i orange price territory. This wave count is invalidated with below 1,374.76.