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The target at 2,035 has almost been met. This structure may now be complete.

Summary: The main wave count will now expect downwards movement, and would be confirmed below 1,820.66. The alternate bull wave count will expect a small second wave correction to not move below 1,820.66. A red candlestick for Monday is most likely.

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Bull Wave Count

S&P 500 daily 2014

I will favour neither the bull or bear wave count. Both are viable and both expect this current upwards impulse could now be over. I will be looking at the structure and depth of downwards movement to determine which wave count is correct.

To see a weekly chart with subdivisions and how to draw trend lines and channels click here.

Upwards movement from the low at 666.79 subdivides as a complete 5-3-5. For the bull wave count this is seen as primary waves 1-2-3.

Within intermediate wave (5) minor wave 2 is an expanded flat and minor wave 4 is a zigzag. Minor wave 3 is 14.29 points longer than 1.618 the length of minor wave 1.

At intermediate degree there is also a very close relationship between intermediate waves (3) and (1): intermediate wave (3) is just 0.76 points less than 2.618 the length of intermediate wave (1).

The aqua blue trend lines are traditional technical analysis trend lines. These lines are long held, repeatedly tested, and shallow enough to be highly technically significant. When the lower of these double trend lines is breached by a close of 3% or more of market value that should indicate a trend change. It does not indicate what degree the trend change should be though.

There is now double technical divergence between MACD and price at the weekly chart level.

There is also still technical divergence between price and MACD at the daily chart level.

Within the first wave down of primary wave 4 no second wave correction may move beyond its start above 2,034.26.

I have an alternate wave count which moves the degree of labelling within minor wave 5 all down one degree, because a five upwards structure may be just minute wave i within minor wave 5.

S&P 500 hourly 2014

Before I have any confidence in this trend change I want to see a red candlestick for Monday, and a more clear breach of this channel about minuette wave (v).

Draw the channel using Elliott’s second technique: the first trend line from the ends of minuette waves (ii) to (iv), then a parallel copy on the end of minuette wave (iii). There is one candlestick now below this channel, but it is a green candlestick. The channel has not been breached by clear downwards movement.

I will have confidence in this trend change at the hourly chart level with movement below 2,001.01. At that stage downwards movement may not be a second wave correction within minuette wave (v) as it may not move beyond the start of its first wave. At that stage the trend change may be of any wave degree, but a trend change would be confirmed.

S&P 500 5 minute 2014

Alternate Bull Wave Count

S&P 500 daily bull alternate 2014

Minor wave 5 may extend, and this idea fits with the second target. At 2,191 primary wave 3 would reach 1.618 the length of primary wave 1. This would see intermediate wave (5) and minor wave 5 within it both extended, and minor wave 5 would be much longer than minor wave 3. This is possible, but unlikely. This wave count has a lower probability than the main bull wave count.

At this stage for this idea it also expects to see some downwards movement for a small second wave correction within minor wave 5. Minute wave ii may find support at the upper aqua blue trend line. It may subdivide into several possible corrective structures, some of which may include a new high above 2,034.26. There is no upper invalidation point for this reason.

This idea also fits for the bear wave count below.

Bear Wave Count

S&P 500 daily bear 2014

This bear wave count differs from the bull wave count at the monthly chart level and at super cycle wave degree. To see the historic picture go here.

The subdivisions within primary waves A-B-C are seen in absolutely exactly the same way as primary waves 1-2-3 for the bull wave count.

For both wave counts when minor wave 5 is a complete structure on the hourly and five minute charts then I will have an alternate wave count which moves the degree of labelling within it all down one degree. A completion of a five wave impulse up within minor wave 5 may be either minor wave 5 in its entirety, or it may only be minute wave i within minor wave 5. This is why I am leaving the invalidation point at 1,820.66.

At cycle degree wave b is over the maximum common length of 138% the length of cycle wave a, at 157% the length of cycle wave a. At 2,393 cycle wave b would be twice the length of cycle wave a and at that point this bear wave count should be discarded.

This analysis is published about 06:46 p.m. EST.