Last analysis expected more choppy overlapping movement for the continuation of a fourth wave correction. This is exactly what has happened, and we have another small red candlestick for Monday’s session.
The wave count remains the same.
Click on the charts below to enlarge.
This wave count has a higher probability than the bullish alternate. Upwards movement over the last 4 1/2 years subdivides best as a zigzag. If something is “off” about the supposed recovery then it must be a B wave because there is plenty that is off in this scenario in terms of social mood.
We should always assume the trend remains the same, until proven otherwise. This is a huge trend change. I will assume we are yet to see new highs while price remains above 1,646.47.
Minor waves 1 and now also 2 are most likely complete. Minor wave 3 upwards may have begun. I have drawn an acceleration channel about minor waves 1 and 2. Minor wave 3 may have found resistance at the upper trend line and may have ended there. The lower trend line should provide support for corrections within minor wave 3.
We may be about to see a larger fractal at minor wave degree of the structure within minor wave 1 at minute wave degree; there the first wave was extended, the third wave was shorter, and the fifth wave was shorter still.
Intermediate wave (3) is just 0.76 points short of 2.618 the length of intermediate wave (1). We may not see a Fibonacci ratio between intermediate wave (5) and either of (3) or (1).
Intermediate wave (1) lasted 18 days. So far intermediate wave (5) has lasted 56 days. It may last a total of a Fibonacci 89 days which would see it end on 10th February, 2014. However, Fibonacci time relationships are not very reliable for the S&P. This is a rough guideline only,
At super cycle degree the structure is an expanded flat correction. Within the flat the maximum common length of cycle wave b is 138% the length of cycle wave a, and this is achieved at 1,858.03. When cycle wave b is longer than the common length of cycle wave a then the probability that an expanded flat is unfolding would reduce and it would be more likely that a long term bull market is underway. Above 1,858.03 I will swap this main wave count over with the bullish alternate.
Further sideways movement in a very small range fits with this wave count nicely.
Now that there is more structure within minor wave 4 I can begin to see which corrective structure may be unfolding.
The first downwards movement subdivides nicely as a three on the five minute chart. This may be minute wave a of a flat correction for minor wave 4, or it may be minute wave w of a double zigzag or double combination.
The next movement is unfolding upwards so far as a three wave structure on the five minute chart. This may be minute wave b of a flat correction, or minute wave x of a double zigzag or double combination.
If this upwards movement reaches 1,844.28 then it would be 90% the length of the small downwards movement, and the minimum requirement for minute wave b within a flat correction would be met.
If upwards movement reaches 1,845.20 then it would be 105% the length of minute wave a, and an expanded flat may be unfolding.
Overall I am expecting another three to seven days of choppy overlapping sideways and downwards movement for minor wave 4. Within it we may see a new high tomorrow.
Minor wave 4 is likely to end within the price territory of the fourth wave of one lesser degree (minute wave iv price territory is between 1,829.09 and 1,824.57).
Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,811.22.
Bullish Alternate Wave Count.
It is possible that a new cycle degree bull market began at 666.79. So far it is not yet halfway through, and I would expect it to last for a few years (at least five more years and probably longer).
The current upwards impulse, labeled intermediate wave (5) for the main wave count and minor wave 5 for this alternate is incomplete. The structure within the final fifth wave is the same, and the structure on the hourly chart is the same. Targets would be the same for this bullish wave count. This wave count does not diverge with the main wave count, and it will not for several weeks or a couple of months or so yet.
The maroon – – – channel is an acceleration channel drawn about primary waves 1 and 2 on the monthly chart (it is drawn in exactly the same way on the main wave count, but there it is termed a corrective channel). I would not expect intermediate wave (2) to breach this channel because a lower degree (intermediate) wave should not breach an acceleration channel of a higher degree (primary) first and second wave.