The S&P 500 has moved slightly lower during Wednesday’s session and the small correction we were expecting may already be over.
We now have short term, mid term and long term targets with only the one daily wave count.
Today I have an alternate hourly wave count, but its probability is significantly lower than the main hourly wave count.
Click on the charts below to enlarge.
It looks highly likely that we have recently seen a very large trend change on the S&P 500 and a new downwards trend, to last months, has begun.
At primary degree wave A is an expanded flat correction. Wave (A) black within it subdivides into a three, and wave (B) black is over 105% of wave (A) black at 123%. The minimum requirements for an expanded flat are met. We should expect wave (C) black to subdivide into a five and move price substantially beyond the end of wave (A) black at 1,074.77.
At 967 wave (C) black would reach 1.618 the length of wave (A) black. If price continues through this first target, or it gets there and the structure is incomplete, then our second (less likely) target is at 685 where wave (C) black would reach 2.618 the length of wave (A) black.
Wave (A) black lasted 4 months. Wave (B) black lasted 6 months. We may expect wave (C) black to last at least 4 months, if not longer.
If wave (ii) green continues further as a double flat or combination it may not move beyond the start of wave (i) green. This wave count is invalidated with movement above 1,422.38.
Main Hourly Wave Count.
Subdivisions on the 5 minute chart favour this wave count. Wave ii orange may already be over as a single brief zigzag.
Downwards movement labeled 1 purple within iii orange subdivides perfectly as a five wave impulse on the 5 minute chart. Upwards movement labeled 2 purple within iii orange subdivides into a clear zigzag structure on the 5 minute chart.
Movement below 1,343.13 would provide some confirmation of this wave count. At that stage we should expect wave ii orange is over and we would be in the middle of wave (iii) green downwards.
If this wave count is correct then tomorrow should see an increase in downwards momentum.
For the short term wave 3 purple would reach 2.618 the length of wave 1 purple at 1,304. I am using 2.618 rather than 1.618 because wave 2 purple was an extremely deep 91% correction of wave 1 purple. This target fits only with the second lower target for wave (iii) green.
In the mid term wave (iii) green would reach 1.618 the length of wave (i) green at 1,310. If price reaches this first target and keeps falling, or if it gets there and the structure is incomplete, our second target is at 1,245 where wave (iii) green would reach 2.618 the length of wave (i) green.
If wave 2 purple extends higher it may not move beyond the start of wave 1 purple. This wave count is invalidated with movement above 1,365.74. Only if this wave count is invalidated with upwards movement should we use the less likely alternate below.
Alternate Hourly Wave Count.
This wave count has a much lower probability because the subdivisions, particularly of wave B purple downwards, do not fit on the 5 minute chart. However, if the main wave count is invalidated by upwards movement then this may provide an adequate explanation.
At 1,372 wave C purple would reach 1.618 the length of wave A purple. This would bring wave ii orange to just below the 0.382 Fibonacci ratio of wave i orange.
Within wave C purple no second wave correction may move beyond the start of the first wave. This wave count is invalidated with movement below 1,343.13.
Mid term targets remain the same for wave (iii) green, which are still about 2 weeks or so away.