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The main wave count looks even better after Friday’s price action. With slightly lower movement the targets have been recalculated.

Summary: I expect to see upwards movement next week. A break above 1,889.07 would confirm this. The first target is 1,911. The second target is 1,938.

This analysis is published about 07:20 p.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. Minute wave v should end when price comes to touch the upper 1-3 trend line of the diagonal. Alternately, it may overshoot this trend line, but that has a lower probability.

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

Main Hourly Wave Count.

S&P 500 hourly 2014

Subminuette wave e did continue a little sideways and now the triangle has a better look on the daily chart. I have more confidence in this wave count today.

At 1,911 minuette wave (c) would reach 0.618 the length of minuette wave (a). If price keeps going through this first target, or if it is reached and the structure of minuette wave (c) is incomplete, then the next target is at 1,938 where minuette wave (c) would reach equality in length with minuette wave (a).

At this stage it looks more likely now that subminuette wave e is complete. However, while price remains below 1,889.07 it will be possible that subminuette wave e could move yet further sideways. If it continues it may not move beyond the end of subminuette wave c below 1,859.79.

Minuette wave (a) lasted six days. In the first instance I would expect minuette wave (c) to be either more brief or about equal in duration.

S&P 500 5 minute 2014

Alternate Hourly Wave Count.

S&P 500 hourly alternate 2014

I have seen structures which look like triangles invalidated and turn out to be some kind of combination or flat correction too many times to not consider that possibility here.

If price moves below 1,859.79 then minuette wave (b) cannot be a contracting triangle. It may continue a little lower as an expanded flat correction.

Within this possible expanded flat subminuette wave a is a double zigzag which fits nicely, and this structure achieves the purpose of a double zigzag as the second zigzag in the double deepens the correction.

Subminuette wave b however also subdivides here as a double zigzag, but the purpose of a double zigzag is not achieved. The second zigzag in this double does not move beyond the end of the first, which reduces the probability of this alternate wave count.

However, if we see movement below 1,859.79 then this would be the wave count I would use.

At 1,834 subminuette wave c would reach 1.618 the length of subminuette wave a.

Minuette wave (b) may not move beyond the end of minuette wave (a) below 1,814.36.

Within subminuette wave c no second wave correction may move beyond the start of its first wave above 1,889.07.

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 a few 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.