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Last analysis of the S&P 500 expected upwards movement with increased momentum which is exactly what has happened during Tuesday’s session.

The wave count remains the same.

Click on the charts below to enlarge.

S&P 500 daily 2012

The structure for primary wave B is a triple zigzag, and price is now within the third zigzag in the triple labeled wave (Z) black.

Wave (Z) black is incomplete and is unfolding as an exaggerated zigzag.

Wave A blue must be truncated to subdivide into a five wave structure.

At 1,470 wave C blue would reach 0.618 the length of wave A blue. About this point primary wave B would also be only 139% of primary wave A. Movement to slightly above 1,470 would avoid a truncation and keep the length of primary wave B closer to the common maximum of 138%.

There is no upper invalidation point for this wave count, but significant movement above 1,470 has a low probability.

Wave A blue lasted 87 days (2 short of a Fibonacci 89). Wave B blue lasted 28 days. I would expect wave C blue to be about 34 days in duration. So far it has only lasted 21 days and it should continue for another couple of weeks or so.

Wave C blue must subdivide into a five wave structure as either an ending diagonal or an impulse. An ending diagonal requires all subwaves to subdivide as zigzags and because the first wave upwards labeled i pink is a five wave impulse an ending diagonal may be eliminated. Wave C blue must be unfolding as an impulse. The structure is incomplete and requires further upwards movement.

S&P 500 hourly 2012

MACD indicates an increase in momentum for Tuesday’s upwards movement. Momentum must increase further to exceed the momentum high at the end of wave i pink.

Within wave iii orange wave 3 purple is 1.48 points short of 1.618 the length of wave 1 purple. I would not expect to see a Fibonacci ratio between wave 5 purple and either of waves 1 or 3 purple. However, wave 5 purple would reach equality with wave 1 purple at 1,458. This target does not have a high probability.

At 1,460 wave (iii) green would reach 1.618 the length of wave (i) green. This target is probably still over a week away.

When wave iii orange is complete we may use Elliott’s technique to draw a parallel channel about this impulse. We may be able to do that after tomorrow’s session.

Within wave iii orange wave 4 purple may not move into wave 1 purple price territory. This wave count is invalidated in the short term with movement below 1,428.23.

When the next upwards movement of wave 5 purple completes wave iii orange then the invalidation point must move up to the high of wave i orange at 1,438.59. Wave iv orange may not move into the price territory of wave i orange.