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Yesterday’s analysis expected upwards movement for Wednesday’s session. This is not what happened. Price has moved lower remaining above the invalidation point on the hourly chart. The wave count remains the same.

Click on the charts below to enlarge.

S&P 500 daily 2013

This wave count agrees with MACD and has some nice Fibonacci ratios in price and Fibonacci relationships in time.

Minor wave 3 is 15.1 points longer than 2.618 the length of minor wave 1.

Ratios within minor wave 3 are: there is no Fibonacci ratio between minute waves iii and i, and minute wave v is 5.44 points longer than equality with minute wave iii.

At 1,740 intermediate wave (C) would reach equality with intermediate wave (A). At 1,739 minor wave 5 would reach 0.618 the length of minor wave 3. At 1,736 minute wave v would reach 0.618 the length of minute wave iii.

Within minor wave 5 no second wave correction may move beyond the start of the first wave. This wave count is invalidated with movement below 1,560.33.

Minor wave 1 lasted a Fibonacci 21 days, minor wave 2 lasted a Fibonacci 8 days, minor wave 3 has no Fibonacci duration at 98 days, and minor wave 4 lasted 22 days, just one day longer than a Fibonacci 21.

At this stage it looks like minor wave 5 may not exhibit a Fibonacci time relationship. However, the next Fibonacci number in the sequence is 55 which could see minor wave 5 ending on 10th September (give or take a day or so either side). This may be the next possibility. At that time I will see if the structure could be considered complete, or not.

Keep drawing the wider parallel channels from the monthly chart and copy them over to the daily chart.

S&P 500 hourly 2013

Downwards movement for Wednesday’s session may have been a second wave correction within minuette wave (iii).

Ratios within micro wave A of subminuette wave ii are: submicro wave (3) has no Fibonacci ratio to submicro wave (1), and submicro wave (5) is just 0.09 points short of 1.618 the length of submicro wave (1).

On the five and one minute chart subminuette wave ii subdivides into a completed zigzag structure. Micro wave C within it may be complete, but there is not enough upwards movement at the end of Wednesday’s session to confirm that the final fifth wave within it is completed. If micro wave C does move slightly lower tomorrow it would avoid a truncation. It may end just below 1,684.83.

Subminuette wave ii may not move beyond the end of subminuette wave i. This wave count is invalidated with movement below 1,682.62.

If price moves below 1,682.62 tomorrow then we should use the second hourly wave count below. The difference between the two is the subdivision of the movement here labeled submicro wave (C) within micro wave B within subminuette wave y within minuette wave (ii). This main wave count sees it as a five wave impulse which has a better fit on the one minute chart. The second wave count below sees it as a three wave zigzag which is possible but has a slightly worse fit and worse Fibonacci ratios. For this reason I favour this first wave count.

S&P 500 hourly II 2013

If price moves below 1,682.62 tomorrow then this second wave count would be confirmed.

It sees minuette wave (ii) as incomplete, and within it the second zigzag of the double labeled subminuette wave y close to completion.

At 1,680 micro wave C within subminuette wave y would reach equality in length with micro wave A. Within micro wave C one of the actionary waves of submicro (1), (3) or (5) is extending, and so far it looks like it may have been submicro wave (1) which extended.

Minuette wave (ii) may not move beyond the start of minuette wave (i). This wave count is invalidated with movement below 1,676.03.

Alternate Wave Count.

S&P 500 hourly alternate 2013

While price remains below 1,709.67 it will remain possible that we have recently seen a trend change at cycle degree. However, we should always assume the trend remains the same until proven otherwise.

We should assume the upwards trend remains valid until this wave count is confirmed with movement below 1,560.33, and then with a breach of the black parallel channel on the daily chart.

If we have seen a trend change then we should see some increase in downwards momentum this week.

Movement below 1,676.03 would provide initial indication that this wave count may be correct.

At 1,660 subminuette wave iii would reach 1.618 the length of subminuette wave i.

Within subminuette wave iii, micro wave 2 may not move beyond the start of micro wave 1. This wave count is invalidated with movement above 1,700.18.

At this stage the lack of increase in downwards momentum may be an indicator that this movement is corrective, and not the start of a third wave down. This wave count would expect downwards momentum to increase quickly from here.