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Movement below 1,439.01 invalidated the main hourly wave count and confirmed the alternate. At that stage the target for downwards movement was at 1,429. Price has fallen 1.66 points short of the target at the end of Wednesday’s session.

The situation looks clearer today and I have only three charts for you. I have still the same two daily wave counts which still differ at the monthly chart level, and one hourly chart. You may review monthly charts here.

Click on the charts below to enlarge.

First Daily Wave Count.

S&P 500 first daily 2012

Downwards movement is too large and does not have the right look in duration to be at green degree. It is much more likely to be at blue (minor) degree and so far is developing a typical flat correction look to it.

At super cycle degree this wave count sees a very rare expanding triangle unfolding, and cycle wave d upwards within the triangle is a double zigzag which must move beyond the end of cycle wave b.

Within the second zigzag of the double, primary wave Y, wave (C) black must unfold as a five wave structure.

Waves 1 through to 3 blue are complete. Wave 2 blue unfolded as a brief zigzag, wave 4 blue looks like a flat correction exhibiting nice alternation.

Any further downwards movement for wave 4 blue may not move into wave 1 blue price territory. This wave count is invalidated with movement below 1,380.39.

When Elliott’s first channeling technique is used about this impulse it does not work. The channel will have to be drawn correctly when wave 4 blue is complete.

S&P 500 hourly 2012

So far we have a three down for wave a pink, a three up for wave b pink, which is a 92% correction of wave a pink, and an impulse developing to the downside. This structure looks like a typical regular flat correction.

A regular flat most commonly has wave C equal in length to wave A. At 1,427 wave C pink would reach equality with wave A pink.

Within wave C pink the structure is incomplete. The third wave, wave (iii) green, is incomplete and is developing as an extension. At 1,430 wave (iii) green would reach 1.618 the length of wave (i) green. This expects only a very small amount of downwards movement to end the extended third wave.

Thereafter, wave (iv) green may not move into wave (i) green price territory. This wave count is invalidated in the short term with movement above 1,453.51.

Finally, wave (v) green should move price to a new low, most likely about 1,427.

This analysis expects choppy overlapping slightly lower movement for another one or two sessions to complete wave C pink.

Second Daily Wave Count.

S&P 500 second daily 2012

It remains possible but unlikely that we have recently seen a major trend change in the S&P 500 and the DJIA.

We should always assume that the trend remains the same, until proven otherwise. At this stage we have absolutely no confirmation of a trend change. We will not have confirmation until price moves below 1,380.39 invalidating the main wave count.

I publish this chart so that we aware of this possibility. We should not rely upon it without confirmation.

Within the new downwards trend no second wave correction may move beyond the start of the first wave. This wave count is invalidated with any movement above 1,474.51.

I can see a possibility of this wave count working for the Dow, but it does not have a very good look.

If we are in a new downwards trend then it would be an unfolding leading diagonal. Wave (i) green subdivides into a zigzag, and wave (ii) green may also be seen as a zigzag. Wave (iii) green must make a new low below the end of wave (i) green.