Select Page

Upwards movement was expected to a short term target at 2,080. Price did move higher to reach 2,072.40 before turning back down.

Summary: In the short term for Monday I expect more downwards movement for a correction. This may end at either 2,051 or 2,015.

Click on charts to enlarge.

Main Bull Wave Count

S&P 500 daily 2015

I will favor neither the bull or bear wave count. Both are viable and both expect this current upwards impulse may again be close to complete.

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 an incomplete 5-3-5. For the bull wave count this is seen as primary waves 1-2-3.

The aqua blue trend lines are traditional technical analysis trend lines. These lines are long held (the lower one has its first anchor in November, 2011), 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. It looks like the last four corrections may have ended about the lower aqua blue trend line, which gives the wave count a typical look.

I have pulled the upper trend line down a little to touch the low of minute wave a within minor wave 4. This may be a better position for recent movement.

There is still triple technical divergence between MACD and price at the weekly chart level.

At 2,191 primary wave 3 would reach 1.618 the length of primary wave 1. This would expect that within minor wave 5 minute wave iii will be shorter than minute wave i, and minute wave v will be shorter still, which would be a repeat of the pattern seen within minor wave 1. Or the target is wrong.

At 2,140 minute wave iii would reach 0.618 the length of minute wave i.

Looking at momentum within intermediate wave (5) it is concerning that minor wave 3 exhibits weakest momentum at the daily chart level, although at the weekly chart level it does have strongest momentum. It is for this reason I am seriously considering the alternate bullish wave count.

S&P 500 hourly 2015

The wave count is changed slightly. I expect this downwards movement seen at the end of Friday’s session is the start of minuette wave (ii) which may be subdividing as a zigzag.

Within minuette wave (i) there are no adequate Fibonacci ratios between subminuette waves i, iii and v. There is alternation between the very shallow expanded flat of subminuette wave ii, and the less shallow zigzag of subminuette wave iv.

Because this is a second wave correction it would be fairly likely to end about the 0.618 Fibonacci ratio at 2,015. It is most likely to subdivide as a zigzag and it should end in one or two more sessions. It is showing up on the daily chart which is typical.

Minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,980.90.

S&P 500 5 minute 2015

Alternate Bull Wave Count

S&P 500 daily alternate 2015

Looking at momentum for the whole of intermediate wave (5) I want to label minor wave 3 over at the high at 2,094 because this has the strongest upwards momentum. The only way this fits is if intermediate wave (5) is seen as an ending diagonal, because within an ending diagonal all the sub waves must be zigzags and the fourth wave should overlap first wave price territory.

Structure on the hourly chart indicates that minor wave 4 is most likely over and minor wave 5 has most likely begun. Minor wave 5 should be a clear three on the daily chart. The best way to see where this final fifth wave should end is probably the 1-3 blue trend line. Contracting diagonals most often see the fifth wave end with a slight overshoot of this trend line.

S&P 500 hourly 2015

Minute wave b now shows on the daily chart as one red candlestick. It should subdivide at the hourly chart level as a clear three wave structure. It may end about either the 0.382 or 0.618 Fibonacci ratios of minute wave a.

Minute wave b may not move beyond the start of minute wave a below 1,980.90.

1-2-3 and A-B-C subdivide the same. When minute waves b and c are complete that is when these two wave counts will again diverge. For now they expect the same movement next.

Bear Wave Count

S&P 500 daily bear 2015

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. The alternate bull wave count idea also works perfectly for this bear wave count.

At cycle degree wave b is over the maximum common length of 138% the length of cycle wave a, at 165% 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.

While we have no confirmation of this wave count we should assume the trend remains the same, upwards. This wave count requires confirmation before I have confidence in it.

This analysis is published about 11:45 p.m. EST.