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The small correction now looks complete. I will expect price to continue upwards towards the target next week.

Summary: Upwards movement should continue for another two or four days. The target is 1,921. A new short term target for a third wave to begin on Monday is at 1,916.

This analysis is published about 01:10 a.m. EST. Click on charts to enlarge.

Bullish Wave Count.

The aqua blue trend lines are critical. Draw the first trend line from the low of 1,158.66 on 25th November, 2011 to the next swing low at 1,266.74 on 4th June, 2012. Create a parallel copy and place it on the low at 1,560.33 on 24th June, 2013. While price remains above the lower of these two aqua blue trend lines we must assume the trend remains upwards. This is the main reason for the bullish wave count being my main wave count.

S&P 500 daily 2014

This bullish wave count expects a new bull market began at 666.79 for a cycle wave V. Within cycle wave V primary waves 1 and 2 are complete. Within primary wave 3 intermediate wave (1) is incomplete.

Within intermediate wave (1) the final fifth wave of minor wave 5 is an almost complete ending contracting diagonal. Although minute waves ii and iv within the diagonal are shallower than normal, all the subdivisions fit perfectly. The diagonal is contracting and the final fifth wave may not be longer than equality with the third at 1,973.72.

Within an ending diagonal all the subwaves may only subdivide as single zigzags. The fourth wave should overlap back into first wave price territory. Within the zigzag of minute wave v minuette wave (c) would reach equality in length with minuette wave (a) at 1,921. Minute wave v should end when price comes to touch the upper 1-3 trend line of the diagonal.

Minuette wave a lasted six days and minuette wave b lasted four days. If minuette wave c is equal in duration to minuette wave a it will end in another two days. However, at this stage that looks too brief. It may last another four days to take a total Fibonacci eight.

Within the zigzag of minute wave v minuette wave (b) may not move beyond the start of minuette wave (a) at 1,814.36.

S&P 500 hourly 2014

Sideways and very slightly lower movement may have ended subminuette wave ii on Friday as a double zigzag. However, if we just move the degree of labeling within subminuette wave ii down one degree this may only be wave A within the correction.

It is reasonably likely the correction is over here because it would be in proportion to subminuette wave i. If we can see a clear five up on the five minute chart, particularly it price moves above 1,891.33 on Monday, then I would have confidence that subminuette wave ii is over and a third wave up has begun.

At 1,916 subminuette wave iii would reach equality in length with subminuette wave i.

I expect to see an increase in upwards momentum next week.

Subminuette wave ii may not move beyond the start of subminuette wave i below 1,850.61.

S&P 500 5 minute 2014

Bearish Alternate Wave Count.

S&P 500 daily bear 2014

This bearish wave count expects that the correction was not over at 666.79, and that may have been just cycle wave a of a huge expanded flat for a super cycle wave II. Cycle wave b upwards is a close to complete zigzag.

Within flat corrections the maximum common length of B waves in relation to A waves is 138%. So far cycle wave b is a 141% correction of cycle wave a. For this reason also this wave count is an alternate.

Within primary wave C the subdivisions are seen here in exactly the same way as the main wave count, both are seen as incomplete five wave impulses with the final fifth wave an almost complete ending contracting diagonal. This bearish wave count would expect a cycle degree trend change to come in about three days.

Alternatively, it is possible that primary wave C is not close to completion. There are several ways to see the many subdivisions within this long movement. The depth of the next downwards correction will tell us what degree the trend change may be: if downwards movement breaches the lower of the two aqua blue trend lines by more than 3% of market value then I would consider a trend change at cycle degree, and if downwards movement breaches the lower edge of the wider maroon – – – channel on the monthly chart then a cycle degree trend change would be confirmed.