Select Page

Downwards movement has invalidated the main and alternate hourly wave counts.

To end the trading week I have two wave counts. We can use confirmation / invalidation points to work with these two wave counts next week.

The sole daily wave count remains valid and is unchanged.

Click on the charts below to enlarge.

S&P 500 daily 2012

This wave count sees a big trend change at the price high of 1,422.38. Primary wave C should make substantial new lows below the end of primary wave A which had its low at 1,074.77. Primary wave C would reach 1.618 the length of primary wave A at 967, completing a typical expanded flat for cycle wave a.

Within primary wave C wave (1) black is a complete five wave impulse downwards. Wave (2) black is unfolding as a double zigzag structure. The purpose of a double zigzag is to deepen a correction. At this stage the final structure of wave Y blue, the second zigzag, may be either complete or about a week away. I have two hourly wave counts today which look at this most recent movement differently.

Wave (2) black may not move beyond the start of wave (1) black. This wave count is invalidated with movement above 1,422.38.

Main Hourly Wave Count.

S&P 500 hourly 2012

Movement below 1,355.7 invalidated the last hourly wave count. This downwards movement may have been a second wave correction within wave c pink.

This main hourly wave count sees wave c pink as unfolding as an ending diagonal. Wave (ii) green may be over or wave c orange within it may extend lower. Second waves of diagonals normally retrace between 0.66 to 0.81 of the first wave so I would not be surprised at all to see wave (ii) green move lower. If it does then it would be most likely to end between 1,334 and 1,325.

All subwaves of ending diagonals must be zigzags. Wave (iii) green upwards must be a zigzag and must make a new high above the end of wave (i) green at 1,374.81.

Thereafter, wave (iv) green must also be a zigzag which overlaps wave (i) green price territory, but does not move beyond the end of wave (ii) green.

This wave count sees overall upwards movement for another few days yet, in choppy overlapping movement. The target at 1,379 is where wave c pink would reach 2.618 the length of wave a pink and is probably too low. When we have the ends of waves (iii) and (iv) green then a more accurate target for wave (v) green may be calculated.

Wave (ii) green may not move beyond the start of wave (i) green. This wave count is invalidated with movement below 1,313.29.

Alternate Hourly Wave Count.

S&P 500 hourly alternate 2012

It is possible to see on the 5 minute chart a complete impulse for wave c pink. This alternate does not have as good a fit as the main hourly wave count and has a slightly lower probability.

Movement below 1,313.29 next week would be strong confirmation of a trend change. At that stage we may be reasonably confident that wave (2) black is over and wave (3) black would be underway. When I have confirmation of a trend change at that stage I will calculate a target for wave (3) black downwards. To do so prior to confirmation would be premature.

Within downwards movement so far it looks like a three wave structure. Wave (iv) green should not move into wave (i) green price territory above 1,369.8. Wave (v) green would most likely make a new low below the end of wave (iii) green, at 1,348.03. Waves (iv) and (v) green should complete during Monday’s session.

The following wave ii pink may not move beyond the start of wave i pink. This wave count is invalidated with movement above 1,374.81.

In the short term this wave count would be invalidated with movement above 1,369.8 (prior to wave (v) green downwards unfolding). Movement above 1,363.02 would be a strong indication that the main hourly wave count is more correct and that we should expect new highs.