Last analysis expected upwards movement from the S&P 500 to start the new week, with the possibility of a very little downwards movement at the very beginning of Monday’s session.
A slight new low before price moved higher for the day has given the wave count a perfect look.
The target is recalculated and has a good probability.
Click on the charts below to enlarge.
The bigger picture sees upwards movement from the end of the “credit crunch” at 666.76 as a double zigzag structure for a cycle degree b wave lasting so far 4.25 years. The second zigzag is almost complete. When it is done we should see another crash to make substantial new lows below 666.76, if the main monthly wave count is correct.
Within intermediate wave (C) minor wave 1 was extended.
There is no Fibonacci ratio between minor waves 3 and 1. This means it is highly likely we should see a Fibonacci ratio between minor wave 5 and either of 3 or 1.
Minor wave 3 is shorter than minor wave 1. Minor wave 5 would be limited to no longer than equality with minor wave 3 because a third wave may never be the shortest. Minor wave 5 is limited to no higher than 1,759.53
At 1,740 intermediate wave (C) would reach equality with the orthodox length of intermediate wave (A). At 1,759 minor wave 5 would reach equality in length with minor wave 3. I favour the higher end of this target zone because it is calculated at a lower wave degree.
Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,597.35.
Draw the parallel channel about intermediate wave (C) using Elliott’s first technique. Draw the first trend line from the highs of minor waves 1 to 3, then place a parallel copy upon the low of minor wave 2. Expect minor wave 4 to find support at the lower edge of this channel. The following fifth wave may end midway in the channel where it intersects with the upper maroon trend line.
The very wide maroon trend channel shown here is copied over from the monthly chart. We may find this movement ends as it finds resistance at the upper trend line.
To begin the new week a little piece of downwards movement completed minor wave 4, and this makes minuette wave (c) look like a perfect five wave impulse.
To confirm that minor wave 4 is over and minor wave 5 upwards is underway we need to see three things:
1. A breach of the smaller green parallel channel drawn around minute wave y zigzag.
2. Movement above 1,647.62. At that stage upwards movement cannot be a fourth wave correction within minuette wave (c) and so minuette wave (c) would have to be over.
3. A clear five wave structure upwards on the hourly chart would provide further confidence. Minor wave 5 is likely to subdivide as an impulse which should begin with a five wave structure.
Within minute wave y there is no adequate Fibonacci ratio between minuette waves (a) and (c).
Ratios within minuette wave (c) are: subminuette wave iii has no Fibonacci ratio to subminuette wave i, and submineutte wave v is just 0.27 points longer than equality with submineutte wave i.
Price has found good support at the lower edge of the parallel channel copied over here from the daily chart. We may see minor wave 5 continue to follow the midline of this channel, or if it gets higher it should find resistance at the upper edge.
When we have confirmation that the main trend has resumed then you may have more confidence in the target on the daily chart.
I will be watching momentum closely over the next couple of weeks or so. The main monthly wave count expects a decrease in momentum for this next upwards wave as it should be a fifth wave. The alternate bullish monthly wave count must see a further increase in momentum at this stage as the middle of a third wave upwards unfolds. Momentum at this point will be a strong indicator for which wave count is correct.
At this stage while price remains below 1,647.62 we must accept the possibility that minor wave 4 may yet move lower and the invalidation point must remain at 1,597.35. However, it is much less likely today that we shall see new lows.