Last analysis expected the S&P 500 to continue to move higher for Friday’s session which is exactly what happened. We now have confirmation on the hourly chart that the upwards trend has resumed.
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. If, however, the next upwards wave sees an increase in momentum beyond that seen for minor wave 3 then the alternate very bullish monthly wave count must be seriously considered. I will be watching momentum carefully over the next few weeks.
Within intermediate wave (C) minor wave 1 was extended.
Minor wave 3 is just 5.82 points short of 0.618 the length of minor wave 1. I would expect the upcoming minor wave 5 to reach equality with minor wave 3. This would be achieved at 1,749.38, and this is also a maximum point for upwards movement because minor wave 3 may not be the shortest wave.
At 1,740 intermediate wave (C) would reach equality with the orthodox length of intermediate wave (A). This gives us a 9 point target zone, and I favour the upper end of the zone because it is calculated at a lower wave degree.
If minor wave 4 were to continue any lower it may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,597.35.
Draw the channel about intermediate wave (C) using Elliott’s second technique. Draw the first trend line from the lows of minor waves 2 to 4, then place a parallel copy upon the hight of minor wave 3. Add a mid line to the channel. Expect minor wave 5 to end about the mid line, or to find resistance at the upper edge.
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.
Movement above 1,626.89 and above the parallel channel containing minor wave 4 downwards (the pink channel) has provided some confirmation that the correction for minor wave 4 is over and minor wave 5 upwards should have begun.
I have more confidence in the target calculated.
It is most likely that minor wave 4 is finally over now. It lasted 10 days, where minor wave 2 lasted only 5 days. Were minor wave 4 to continue any further sideways it would begin to be too far out of proportion to minor wave 2 and the wave count would then not have the “right look”. Also, there is no further room for downwards movement.
So far within minor wave 5 we may have minute wave i complete. Minute wave ii may be a brief shallow correction which found support at the upper edge of the parallel channel containing minor wave 4.
At 1,705 minute wave iii would reach 1.618 the length of minute wave i. This target will remain valid only as long as minute wave ii does not move lower.
The next line of support and resistance may be the mid line of the wider blue channel copied over here from the daily chart.
Minor wave 3 lasted 24 days. I would expect minor wave 5 to be about the same duration. I am expecting about four to five weeks more of slowing upwards movement as minor wave 5 completes. It should show classic divergence with minor wave 3 on MACD.