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Upwards movement was expected. The structure is incomplete and the trend line is still not met.

Summary: Upwards movement is incomplete. The target is at 1,936 to 1,939 and this may be three more days away. Upwards movement may end when the upper i-iii pink trend line is at least met, and most likely slightly overshot.

This analysis is published about 07:19 p.m. EST. Click on charts to enlarge.

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.

Bullish Wave Count.

S&P 500 daily 2014

This bullish wave count expects a cycle degree correction was over at 666.79 for a fourth wave, and a new cycle degree bull market began there for a fifth wave. Within cycle wave V primary waves 1 and 2 are complete. Within primary wave 3 intermediate wave (1) is almost complete.

Minor wave 5 is an almost complete ending contracting diagonal. Within an ending diagonal all the subwaves must be single zigzags, and the fourth wave should overlap first wave price territory.

Within the final fifth wave of this diagonal minuette wave (b) is a running contracting triangle. Minuette wave (c) is an incomplete impulse.

I would expect the final fifth wave of this diagonal to end at the upper i-iii trend line, or maybe to overshoot this trend line.

The diagonal is contracting because minute wave iii is shorter than minute wave i. Minute wave v may not be longer than equality with minute wave iii at 1,973.72 because a third wave may never be the shortest wave.

At 1,939 minuette wave (c) would reach equality with minuette wave (a). Minuette wave (c) has now lasted ten days and has not reached the pink i-iii trend line of the diagonal. If it continues for another three more days it may take a total Fibonacci 13.

There is still divergence with price trending higher and MACD trending lower. This classic technical divergence supports this wave count and indicates that at least a reasonably sized correction should arrive soon.

S&P 500 hourly 2014

The pink trend line is still not met so I will expect that minuette wave (c) is not over.

I have adjusted the labeling within minute wave c because the low at 1,918.60 did not nicely fit yesterday’s interpretation of this wave.

I expect that subminuette waves iii and iv have more recently ended. Here subminuette wave iii is just 0.83 short of 2.618 the length of subminuette wave i.

At 1,936 subminuette wave v would reach equality in length with subminuette wave i. This target may be met in one to three more days.

This gives us a three point target zone for upwards movement to end.

I have redrawn the channel using Elliott’s second technique: draw the first trend line from the lows labeled subminuette waves ii to iv, then place a parallel copy upon the high labeled subminuette wave iii. I would expect subminuette wave v to most likely end midway within this channel, or less likely about the upper edge of it.

Upwards movement is now very close to the upper pink i-iii trend line of the diagonal. When this line is touched we may then look out for an imminent trend change.

Within subminuette wave v micro wave 2 may not move beyond the start of micro wave 1 below 1,918.60.

S&P 500 5 minute 2014

Bearish Alternate Wave Count.

S&P 500 daily bear 2014

This bearish alternate wave count expects that the correction is not over. The flat correction which ended at 666.79 was only cycle wave a of a larger super cycle second wave correction.

Cycle wave b is now longer than the maximum common length of 138% for a B wave of a flat correction.

Cycle wave b is an almost complete zigzag structure.

A clear breach of the large maroon – – – channel on the monthly and weekly charts is required for confirmation of this wave count. If that happens then this would be my main wave count and would be strongly favoured. Only once this wave count is confirmed will I calculate downwards targets for cycle wave c for you; it would be premature to do that prior to confirmation.