As our main wave counts, both daily and hourly, expected, the S&P 500 has moved lower. Price has not quite breached our confidence point on the daily chart though. If it does tomorrow we shall have clarity; at that stage our main wave count would significantly increase in probability and our alternate would decrease.
Price has broken through resistance on the lower edge of the parallel channel of our alternate daily wave count. This is significant and may indicate a proper channel breach is imminent.
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This main wave count has increased in probability today.
It is mostly more likely than our alternate because the subdivisions within W blue of (B) black have a much better fit. Within wave c pink of wave Y blue the subdivisions also fit perfectly and there are good Fibonacci ratios within it.
At primary degree wave A would be an expanded flat correction because wave (B) black is a 123% correction of wave (A) black. We would expect wave (C) black to most likely reach 1.618 the length of wave (A) black a 967. If price moves through this first target then the next (less likely) target would be where wave (C) black reaches 2.618 the length of wave (A) black at 685.
Movement below 1,370.3 invalidated our alternate hourly wave count and confirmed this main wave count. With a clear trend channel breach on this hourly chart of the small channel containing wave (ii) green we may expect that the correction is over and a third wave down is underway. When price moves below the low of (i) green at 1,357.38 then wave (iii) green would be confirmed as a core rule would be met.
In the short term wave iii orange may reach 4.236 the length of wave i orange at 1,352. At 1,348 wave 5 purple would reach equality with wave 1 purple. This gives us a 4 point target zone which could be reached tomorrow.
Our mid term target remains the same. At 1,288 wave (iii) green would reach 1.618 the length of wave (i) green. This target may be reached within one to two weeks.
In the short term when markets open tomorrow wave 4 purple may not move into wave 1 purple price territory. Movement above 1,370.3 would invalidate this wave count, or at least invalidate my labeling of most recent movement.
Alternate Daily Wave Count.
Monday’s session saw price break through resistance of the lower edge of this channel. We have an overshoot. If price continues lower tomorrow, as our main wave count expects it to, then we shall have a full channel breach and I would discard this wave count. With a clear overshoot this wave count has significantly reduced in probability.
If the upwards wave labeled A blue here subdivides into a five then wave (B) black may be a single zigzag structure. This wave count has a fairly low probability because this wave subdivides most easily into a three, and it is difficult (but possible) to see it as a five. As a five it has a strange looking third wave which reduces the probability of this wave count.
At 1,466 wave v pink would reach equality with wave i pink. Wave (B) black would be almost 138% the length of wave (A) black, the maximum common length for a B wave in relation to an A wave of a flat correction.
Wave iv pink may not move into wave i pink price territory. This wave count is invalidated with movement below 1,267.06. However, in practice I would discard this wave count before price gets that low, as a strong and significant breach of the parallel channel containing wave C blue would reduce the probability of this wave count.