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Yesterday’s analysis expected choppy overlapping movement trending downwards for Wednesday. This is not what happened. A sharp upwards thrust above 1,709.67 has confirmed the main daily wave count and invalidated the alternate. I have just the one wave count for you today.

It is time again to take a quick look at the bigger picture. I will review the main and alternate monthly charts today.

Click on the charts below to enlarge.

Main Wave Count.

S&P 500 monthly 2013

This main monthly wave count expects the S&P is still within a large correction at super cycle degree, unfolding as an expanded flat correction. The current upwards movement is the end of cycle wave b which subdivides as a double zigzag.

A breach of the maroon channel containing cycle wave b would provide trend channel confirmation of a trend change. Movement below 1,370.58 would provide full and final price confirmation that the market is crashing to new lows.

Expanded flats normally have C waves which move substantially beyond the end of the A wave. This wave count would expect substantial movement below 666.76.

Flat corrections normally have B waves which are between 100% to 138% the length of the A wave. The maximum common length for cycle wave b would be at 1,858. There is no rule regarding a maximum allowable length for B waves within flats so there is no upper invalidation point for this wave count. If price moves above 1,858 then this wave count would reduce in probability and the alternate would increase.

S&P 500 daily 2013

The target for minute wave iii was too low. The target for cycle wave b may also be too low, unless it ends in a truncation. When minute waves iii and iv are completed I will recalculate the target so it may change.

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.

Within minor wave 5 minute wave ii may not move beyond the start of minute wave i. 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.

Minor wave 5 may not exhibit a Fibonacci time relationship. The next possibility may be the 29th of October (give or take two days either side of this date) where minor wave 5 would have lasted a Fibonacci 89 days. This is a date to look out for, but cannot be relied upon because Fibonacci time relationships do not occur often enough to be reliable.

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

S&P 500 hourly 2013

Although upwards momentum increased it is not stronger than the middle of this third wave, so the labeling for the middle will remain the same.

Upwards movement for Wednesday’s session was a third wave. A final fifth wave upwards is needed to complete the structure at subminuette wave degree. At 1,731 subminuette wave v would reach equality in length with subminutte wave iii. I will expect upwards movement tomorrow to reach at least this short term target.

Minuette wave (iv) needs to unfold still, to move price lower. It should be shallow, choppy and overlapping. It should show up on the daily chart as at least one red candlestick. Minuette wave (iv) may not move into minuette wave (i) price territory. This wave count is invalidated with movement below 1,641.18.

Alternate Monthly Wave Count.

S&P 500 monthly alternate 2013

This has been the alternate monthly wave count for a long while now. Last time I reviewed it I said we needed to see some increase in upwards momentum for it to make sense and be viable. Momentum has increased clearly, and this wave count now has a very good probability.

Within the new cycle wave V upwards trend it has so far lasted 3 3/4 years, and has just passed the middle. This fits nicely with an expectation for cycle degree waves to last at least one and more likely several years. This upwards wave may end in another three or so years.

Within cycle wave V primary waves 1 and 2 are complete. Primary wave 3 is incomplete.

Within primary wave 3 intermediate waves (1) and (2) are complete. Intermediate wave (3) is nearing completion and the subdivisions are the same as on the daily chart for the main wave count.

When intermediate wave (4) arrives this wave count will diverge from the main wave count. I would expect intermediate wave (4) to show alternation with intermediate wave (2) so it should be shallow, choppy and sideways. It would be most likely to end within the price territory of the fourth wave of one lesser degree, between 1,709.67 and 1,627.47. If it moved lower it should find support at the lower end of the black channel.

At that stage the main monthly wave count would expect a market crash. If at that time downwards movement is not clearly impulsive, is not subdividing into five wave structures, and is hesitant, then this alternate wave count would be an excellent explanation. If however downwards movement is clear, strong, subdivides into fives and breaches the black channel here then the main wave count would be more likely.

Intermediate wave (4) may not move into intermediate wave (1) price territory. Movement below 1,370.58 would firmly invalidate this wave count and confirm the main wave count.