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Again, there are three possibilities for downwards movement from the last major swing high of 3rd November.

Again, I have three daily charts looking at three possibilities.

Summary: A downwards trend is still in place. The preferred bear wave count expects a big third wave is in the early stages. The final invalidation point is at 2,116.48. The target for this third wave is at 1,428. In the short term, a second or B wave is incomplete, which may end when price finds resistance at the short term orange channel on the hourly chart. When the short term cyan trend line on the hourly chart which is providing support is breached to the downside, then the downwards trend may have resumed.

To see how each of the bull and bear wave counts fit within a larger time frame see the Grand Supercycle Analysis.

To see detail of the bull market from 2009 to the all time high on weekly charts, click here.

Last published monthly charts can be seen here.

If I was asked to pick a winner (which I am reluctant to do) I would say the bear wave count has a higher probability. It is better supported by regular technical analysis at the monthly chart level, it fits the Grand Supercycle analysis better, and it has overall the “right look”.

New updates to this analysis are in bold.



S&P 500 daily 2015
Click chart to enlarge.

This wave count is bullish at Super Cycle degree.

Cycle wave IV may not move into cycle wave I price territory below 1,370.58. If this bull wave count is invalidated by downwards movement, then the bear wave count shall be fully confirmed.

Cycle wave II was a shallow 0.41 zigzag lasting three months. Cycle wave IV should exhibit alternation in structure and maybe also alternation in depth. Cycle wave IV may be a flat, combination or triangle. The two daily charts look at these three possibilities.

Cycle wave IV may end within the price range of the fourth wave of one lesser degree. Because of the good Fibonacci ratio for primary wave 3 and the perfect subdivisions within it, I am confident that primary wave 4 has its range from 1,730 to 1,647.

If a zigzag is complete at the last major low as labelled, then cycle wave IV may be unfolding as a flat, combination or triangle.

Primary wave C should subdivide as a five and primary wave Y should begin with a zigzag downwards. This downwards movement is either intermediate waves (1)-(2)-(3) of an impulse for primary wave C or minor waves A-B-C of a zigzag for intermediate wave (A). Both these ideas need to see a five down complete towards the target, so at this stage there is no divergence in expectations regarding targets or direction.

Primary wave A or W lasted three months. Primary wave C or Y may be expected to also last about three months.

Within the new downwards wave of primary wave C or Y, a first and second wave, or A and B wave, is now complete. Intermediate wave (2) or minor wave B lasted a Fibonacci 13 days exactly. At 1,850 intermediate wave (3) or minor wave C would reach 2.618 the length of intermediate wave (1). At this stage, this will be the sole target for this third (or C) wave to end as it fits better with more short term targets calculated at the hourly chart level.

No second wave correction may move beyond its start above 2,104.27 within intermediate wave (3) or minor wave C. This invalidation point allows for the possibility that there may be a leading diagonal unfolding for a first wave down. Leading diagonals in first wave positions are often followed by very deep second wave corrections. When the structure of minor wave 1 is complete, then a deep zigzag for minor wave 2 would be expected which may find resistance at the upper cyan trend line.


S&P 500 daily 2015
Click chart to enlarge.

Cycle wave IV may unfold as a shallow triangle. This would provide alternation with the 0.41 zigzag of cycle wave II.

The triangle may be either a regular contracting or regular barrier triangle. An expanding triangle would also be technically possible, but as they are the rarest of all Elliott wave structures I would only chart and consider it if it shows itself to be true. Prior to that, the probability is too low for consideration.

Primary wave B would be a complete zigzag. The subdivisions all fit and now it has a clearer three wave look to it.

Primary wave C should unfold downwards as a single or double zigzag. So far it may be a single zigzag, with intermediate wave (C) unfolding as an ending expanding diagonal. At 1,947 intermediate wave (C) would reach 1.618 the length of intermediate wave (A).

Primary wave C may not move below the end of primary wave A at 1,867.01. This invalidation point is black and white for both a contracting and barrier triangle.

When primary wave C is complete, then primary wave D upwards should unfold as a single or double zigzag. For a contracting triangle, primary wave D may not move beyond the end of primary wave B above 2,116.48. For a barrier triangle, primary wave D should end about the same level as primary wave B at 2,116.48. The triangle would remain valid as long as the B-D trend line remains essentially flat. This invalidation point is not black and white. This is the only Elliot wave rule with any grey area.

Thereafter, primary wave E downwards may not move beyond the end of primary wave C.

The whole structure moves sideways in an ever decreasing range. The purpose of triangles is to take up time and move price sideways. Price exits the triangle in the same direction that it entered, in this case up. When the triangle is complete, then the bull market would be expected to resume. This triangle should take several months yet to complete.


S&P 500 hourly 2015
Click chart to enlarge.

This hourly chart follows on directly from the labelling of the main daily chart and shows all movement since the end of intermediate wave (2) as a possible leading expanding diagonal.

The final fifth wave of the diagonal is underway. It is most likely to subdivide as a zigzag.

The small green daily candlestick for Tuesday would make more sense if it is wave B within the zigzag and not a fourth wave within wave A as labelled yesterday. Because it shows up on the daily chart and subminuette wave ii did not, this is more likely to be minuette wave (b).

Minuette wave (a) will fit as an impulse with an extended fifth wave. This looks like an impulse more typical of commodities than the stock market, but sometimes the S&P does exhibit swift strong fifth waves.

Ratios within minuette wave (a) are: subminuette wave iii has no Fibonacci ratio to subminuette wave i, and subminuette wave v is 3.88 points longer than 2.618 the length of subminuette wave iii (this difference is less than 10% of the length of subminuette wave v, so I consider it close enough to be an acceptable Fibonacci relationship).

Minuette wave (b) may be any one of a possible 23 corrective structures (if all possible triangles and combinations are taken into consideration). Of all Elliott waves, it is B waves which are the most difficult to analyse and low degree B waves should never be traded. They exhibit the greatest variety in form and structure, and tend to be the most time consuming and complicated of all movements.

At this stage, minuette wave (b) may be an almost complete double zigzag as labelled. It may find resistance at the upper edge of the channel drawn about minuette wave (a). If it breaks above the upper edge of the channel, then look for it to reach up to the 0.618 Fibonacci ratio at 2,046.

It is also equally as likely that minuette wave (b) is only just beginning. The degree of labelling within it may be moved down one degree, so this may be only wave A of a more time consuming flat correction or triangle for minuette wave (b). The only thing which would eliminate this idea as a clear five down on the hourly chart.

So far upwards movement is finding support at the short term upwards sloping cyan trend line drawn along the lower edge of minuette wave (b). When this cyan trend line is breached by downwards movement, then it may be earliest indication that minuette wave (b) is over.

Because the diagonal for minor wave 1 would be expanding, the final fifth wave of minute wave v must be longer than equality in length with minute wave iii. At 1,980.98 minute wave v would reach equality with minute wave iii; it must end below this point.

When I have some confidence that minuette wave (b) is complete, then the ratio between minuette waves (a) and (c) may be used to calculate a final target for the zigzag to end. This cannot be done today.

Minuette wave (b) may not move beyond the start of minuette wave (a) above 2,081.56.


S&P 500 daily 2015
Click chart to enlarge.

I can again see the possibility that cycle wave IV is over and upwards movement may be the start of cycle wave V.

If cycle wave IV is over, as labelled, then there is inadequate alternation between cycle waves II and IV. Cycle wave II was a shallow 0.41 zigzag. Here, cycle wave IV is a more shallow 0.25 zigzag. Both are the same structure.

If cycle wave V has begun, then primary wave 1 within it may be an incomplete impulse. At 2,557 cycle wave V would reach equality in length with cycle wave I. If it also is the same in duration as cycle wave I, then it may last a year.

Intermediate wave (2) was a deep 0.94 expanded flat within primary wave 1. Intermediate wave (4) would be an incomplete zigzag which would also be relatively deep when it is complete. Minor wave C must complete as a five wave structure downwards, and at this stage it may be an incomplete ending expanding diagonal. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,948.04.

This wave count does not have any support from regular technical analysis. I do not have any confidence in it. It is presented as a “what if?” only, to consider all possibilities.



S&P 500 daily bear 2015
Click chart to enlarge.

This bear wave count fits better than the bull with the even larger picture, super cycle analysis found here. It is also well supported by regular technical analysis at the monthly chart level.

Importantly, there is no lower invalidation point for this wave count. That means there is no lower limit to this bear market.

The downwards movement labelled intermediate wave (1) looks like a five. If minor wave 2 is seen as a double flat with a triangle for wave X within it, then the subdivisions all fit nicely.

Ratios within intermediate wave (1) are: minor wave 3 is 7.13 points short of 6.854 the length of minor wave 1, and minor wave 5 is just 2.82 points longer than 0.618 the length of minor wave 3. These excellent Fibonacci ratios add some support to this wave count.

Intermediate wave (2) was a very deep 0.93 zigzag. Because intermediate wave (2) was so deep the best Fibonacci ratio to apply for the target of intermediate wave (3) is 2.618 which gives a target at 1,428. If intermediate wave (3) ends below this target, then the degree of labelling within this downwards movement may be moved up one degree; this may be primary wave 3 now unfolding and in its early stages.

Within intermediate wave (3), minor waves 1 and 2 are complete. The upwards movement for minor wave 2 does have a strong three wave look to it at the daily chart level. Minor wave 2 was another deep correction at 0.87 of minor wave 1. At 1,850 minor wave 3 would reach 2.618 the length of minor wave 1. If price falls through this first target, then the next Fibonacci ratio in the sequence is 4.236 which would be reached at 1,693. If minor wave 3 is very extended, then the degree of labelling for all downwards movement from the all time high will be moved up one degree.

It is still possible (but still less likely) that primary wave 1 is unfolding as a leading diagonal. I will keep that chart up to date and will publish it if and when it begins to diverge from the idea presented here. For now I want to keep the number of charts published more manageable.

A line from the ends of intermediate wave (2) to minor wave 2 is drawn. This line may show where any further upwards movement finds resistance.

For the bear wave count today, I have two ideas for downwards movement from the end of intermediate wave (2): either a series of overlapping first and second waves or a leading expanding diagonal. This first chart looks at a series of overlapping first and second waves. The only problem with this idea is the brevity of minute wave ii when compared to minuette wave (ii) one degree lower which lasted ten times the duration.

The idea presented with the bull wave count also works in the same way for the bear wave count: a leading expanding diagonal may have begun at the high labelled minute wave ii.


S&P 500 daily bear 2015
Click chart to enlarge.

In the short term, the structure of the last wave down and the current wave up is seen in exactly the same way again. The downwards impulse now looks more likely to have been complete with a strong extended fifth wave, and upwards movement may be an incomplete second wave correction unfolding as a double zigzag.

The only corrective structures that a second waves may not take are triangles (as the sole structure).

If the idea of a series of overlapping first and second waves is correct, then this current upwards movement should be almost complete. There should now be enough of a strong downwards pull from the middle of a big third wave to force subminuette wave ii to be more brief and maybe also more shallow than second wave corrections normally are. It may end close to the 0.382 Fibonacci ratio at 2,025.

If upwards movement continues higher, then the next reasonable expectation for it to end would be the 0.618 Fibonacci ratio at 2,046.

For the idea of overlapping first and second waves one more upwards day would be reasonable. But if this small correction continues much longer than that, it will start to look more and more unlikely and the idea may be discarded in favour of the alternate below.

Subminuette wave ii may not move beyond the start of subminuette wave i above 2,081.56.


S&P 500 daily bear 2015
Click chart to enlarge.

This bear wave count is identical to the first bear daily chart right up to the high labelled intermediate wave (2).

Thereafter, it looks at the possibility that a first wave leading diagonal may be unfolding.

The diagonal would be expanding and may have begun earlier than the chart for the bull daily wave count. Minute wave iii is longer than minute wave i, and minute wave iv is longer than minute wave ii. The trend lines diverge, just.

Minute wave v must be longer than minute wave iii, so it must end below 1,970.55.

Leading diagonals in first wave positions are often followed by very deep second wave corrections. When minor wave 1 may be seen as complete, then minor wave 2 should unfold over a couple of weeks and may find resistance at the upper cyan trend line. It may not move beyond the start of minor wave 1 above 2,116.48.

The target for intermediate wave (3) is also the same, only the pathway along the way down here is seen differently.

In the short term, the structure on the hourly chart is also the same. A zigzag downwards for minute wave v would be unfolding and within it minuette wave (a) would be a complete impulse. Current movement for Tuesday would be the start of minuette wave (b). In the short term, minuette wave (b) may not move above the start of minuette wave (a) at 2,081.56.

Because all three ideas at the daily chart level today have exactly the same expectation for what happens next at the hourly chart level, I have a little more confidence in the short term outlook.

Once the zigzag downwards is complete, then how high the next bounce goes and how long it lasts may begin to illuminate which of the three ideas for this move since the high on 2nd November (here labelled intermediate wave (2) ) is correct.



S&P 500 daily 2015
Click chart to enlarge. Chart courtesy of

Upwards movement for Tuesday comes with a decline in volume. The rise in price is again not supported by volume, so is suspicious.

The small green candlestick for Tuesday has a small real body. It is more bullish than bearish, but it is not convincingly bullish at all. Overall, it represents indecision, a balance between bulls and bears with the bulls slightly winning.

Price is finding resistance today about the purple horizontal trend line at 2,020, after bouncing up from the lower line about 1,990.

ADX is still overall increasing and above 15, indicating the start of a new downwards trend. ATR is less clear. It may be beginning to increase overall, but today it is declining.

On Balance Volume may again lead the way. It has turned upwards to find resistance at the small cyan trend line. This may provide resistance and halt the upwards move in price. If it does not, then the next line of resistance for OBV is the purple line which is not very far away at all.

RSI is still close to neutral. There is plenty of room for this market to fall.


For the bear wave count I am waiting for Dow Theory to confirm a market crash. I am choosing to use the S&P500, Dow Industrials, Dow Transportation, Nasdaq and I’ll add the Russell 2000 index. Major swing lows are noted below. So far the Industrials, Transportation and Russell 2000 have made new major swing lows. None of these indices have made new highs.

At this stage, if the S&P500 and Nasdaq also make new major swing lows, then Dow Theory would confirm a major new bear market. At that stage, my only wave count would be the bear wave count.

S&P500: 1,821.61
Nasdaq: 4,117.84
DJT: 7,700.49 – this price point was breached.
DJIA: 15,855.12 – this price point was breached.
Russell 2000: 1,343.51 – this price point was breached.

This analysis is published about 06:44 p.m. EST.