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Movement above 1,410.03 invalidated the alternate hourly wave count confirming the main wave count. At that stage the short term target was close by at 1,413 and the first target for the movement to end at 1,417 was met during Thursday’s session.

The S&P 500 looks to be completing a corrective structure. At this stage I have now only one daily and one hourly wave count.

If the main wave count is invalidated then I have an alternate historic analysis to refer to. An invalidation of this wave count would be hugely significant and it would change the picture at cycle degree.

Click on the charts below to enlarge.

S&P 500 daily 2012

If wave (2) black is a single zigzag then wave A blue was a leading diagonal and it would be likely that wave C blue would be an impulse to see alternation between the two.

There is almost no room left for upwards movement of wave (2) black. Second waves can and often do correct to very deep degrees. When second waves correct to very deep degrees they convince us that we shall see new price extremes, and they do this right before a strong third wave moves price in the opposite direction. We should keep this tendency in mind over the next few days.

On the daily chart it seems clear that wave (1) black downwards has an impulsive structure and wave (2) black upwards has a typically choppy overlapping corrective structure. The overall look of these movements supports this wave count.

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

If price does not move above this point then any subsequent downwards movement below 1,391.74 would be required to provide any confidence in a possible trend change. Movement below the parallel channel on the hourly chart in the first instance, and on the daily chart after that, would provide trend channel confirmation of a trend change.

If this wave count is invalidated with movement above 1,422.38 then the only explanation that I can see at this point is the first alternate monthly wave count in the historic analysis here. This alternate wave count has a completely different expectation: that the S&P 500 is in an upwards trend to make new all time highs. However, the structure within this alternate wave count is an expanding triangle which is one of the rarest of all Elliott wave structures, and the rarity of this structure significantly reduces its probability.

S&P 500 hourly 2012

The alternate hourly wave count was invalidated with a new high and this main wave count is the only hourly wave count I have for you today.

On the 5 minute chart upwards movement for Thursday’s session subdivides perfectly into a complete five wave impulse. Wave (iii) green would most likely be over now and a little longer than expected. There is a little room for movement for wave (iv) green.

On the 5 minute chart wave (iv) green is a complete zigzag. This movement may be wave (iv) green in its entirety, or it may be only wave a within wave (iv) green. If wave (iv) green continues lower and sideways it may not move into wave (i) green price territory. This wave count is invalidated with movement below 1,410.03 in the short term.

If wave (iv) green is over then at 1,422 wave (v) green would reach 0.618 the length of wave (i) green. Because there is no Fibonacci ratio between waves (i) and (iii) green it is very likely that we shall see a Fibonacci ratio exhibited between wave (v) green and either of (i) or (iii) green. This target has a good probability.

At 1,421 wave v pink would reach 0.382 the length of wave i pink.

Wave (v) green may last only one session, or part thereof.

If wave (iv) green is complete already then this upwards movement may end tomorrow. If wave (iv) green is not over and it moves price sideways for a while the end to this upwards movement may come next week.

When we have a little more upwards movement which could be considered wave (v) green then the invalidation point at 1,410.03 no longer applies. At that stage we shall be looking to 1,391.74 in the first instance as a price point to indicate a trend change.

It looks like wave (2) black could correct right up to the start of wave (1) black and test our nerves to the limit. Only movement above 1,422.38 would invalidate this wave count, but it would only need to be a fraction of a point. The rule, and this invalidation point, is black and white.