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Sideways movement for a small green daily candlestick still fits the Elliott wave count.

Summary: The correction is still most likely over. Price confirmation that the correction is over is still required with a new low below 1,962.96. Upwards movement may continue while price remains above this point. A low below 1,962.96 by any amount at any time frame would indicate a strong third wave down is most likely beginning.

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 weekly 2015
Click chart to enlarge.

To see all movement from the all time high without squashing the daily candlesticks up too much, it is time to publish weekly charts regularly.

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, or combination. This first daily chart looks at a flat correction.

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.

Primary wave C should subdivide as a five.


S&P 500 daily 2015
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Within the new downwards wave of primary wave C, intermediate waves (1), (2) and now (3) may be complete. Intermediate wave (4) may now be over. Intermediate wave (2) will subdivide either as a single or double zigzag (as will intermediate wave (4) ). There is inadequate alternation between these two corrections, which reduces the probability that the current correction is a fourth wave.

Draw the channel about primary wave C using Elliott’s second technique. Draw the first trend line from the ends of intermediate waves (1) to (4), then a parallel copy on the end of intermediate wave (3). Expect intermediate wave (5) to find support at the lower edge. Intermediate wave (5) is highly likely to end slightly below 1,810.1.

The idea of a flat correction for cycle wave IV has the best look for the bull wave count. The structure would be nearly complete and at the monthly level cycle wave IV would be relatively in proportion to cycle wave II.


S&P 500 hourly 2015
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Comment on structure will be with the bear wave count today.


S&P 500 daily 2015
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This idea is technically possible, but it does not have the right look. It is presented only to consider all possibilities.

If cycle wave IV is a combination, then the first structure may have been a flat correction. But within primary wave W, the type of flat is a regular flat because intermediate wave (B) is less than 105% of intermediate wave (A). Regular flats are sideways movements. Their C waves normally are about even in length with their A waves and normally end only a little beyond the end of the A wave. This possible regular flat has a C wave which ends well beyond the end of the A wave, which gives this possible flat correction a very atypical look.

If cycle wave IV is a combination, then the first structure must be seen as a flat, despite its problems. The second structure of primary wave Y can only be seen as a zigzag because it does not meet the rules for a flat correction.

If cycle wave IV is a combination, then it would be complete. The combination would be a flat – X – zigzag.

Within the new bull market of cycle wave V, no second wave correction may move beyond the start of its first wave below 1,810.10.

I do not have any confidence in this wave count. It should only be used if price confirms it by invalidating all other options above 2,104.27.



S&P 500 weekly bear 2015
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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.

Downwards movement so far within January still looks like a third wave. This third wave for intermediate wave (3) still has a long way to go. It has to move far enough below the price territory of intermediate wave (1), which has its extreme at 1,867.01, to allow room for a following fourth wave correction to unfold which must remain below intermediate wave (1) price territory.

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.


S&P 500 daily bear 2015
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Intermediate wave (2) lasted 25 sessions (not a Fibonacci number) and minor wave 2 lasted 11 sessions (not a Fibonacci number).

Minute wave ii has now lasted fifteen sessions, four longer than minor wave 2. At this stage, the size of minute wave ii no longer gives the wave count the right look, so for this reason the alternate below is published. The S&P does not always exhibit perfect proportions, so this wave count remains entirely valid. The overall look is not too far from perfect to be somewhat acceptable for this market in my experience.

The channel about minute wave ii has been breached now by a full daily candlestick below and not touching the lower trend line. The small amount of upwards movement for Wednesday looks like a typical throwback to the trend line.

Minute wave ii may not move beyond the start of minute wave i above 2,104.27.


S&P 500 daily bear 2015
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There are two ways to see this upwards movement: as a double zigzag as shown here or as a single zigzag as shown for the alternate below. Both ways to label it work in the same way for this and the alternate wave count below.

Downwards movement from the high labelled minute wave ii subdivides as fives downwards and threes upwards on the five minute chart. This supports the idea that minute wave ii is very likely over, along with the now very clear breach of the channel containing minute wave ii.

For the S&P, within its impulses, it is very commonly (almost always) the third wave which extends and when that happens the third wave within each third wave is also extended. Like a series of Russian dolls, each lower degree third wave is an extension within the prior third wave. This necessarily begins with a series of overlapping first and second waves.

There is still no price confirmation of a trend change. Earliest price confirmation would come with a new low below 1,974.08. This is the start of micro wave 5. A new low below this point could not be a second wave correction within micro wave 5.

A new low below 1,962.96 would invalidate the alternate idea for the hourly chart below and provide final confirmation of a trend change.

At 1,533 minute wave iii would reach 1.618 the length of minute wave i. If this target is wrong, it may not be low enough. I may add further targets when a trend change is confirmed.


S&P 500 daily bear 2015
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If intermediate wave (2) ends on 2nd December, 2015, then it will only fit as a zigzag with a truncated C wave. I have tried to see other ways of labelling this movement with the same end and so far I cannot find a better solution. The truncation is large at 12.19 points which gives this wave count a very low probability. But this now resolves the problem the main wave count has of proportion.

Intermediate wave (2) for this wave count is 45 days in duration. Minor wave 2 is now eighteen days in duration, so the proportions look good. It is also possible that minor wave 2 is a completed double zigzag lasting fifteen days as per labelling for this bounce with the main bear daily chart.

Minor wave 2 may not move beyond the start of minor wave 1 above 2,104.27.

This alternate makes a difference to the target. At 1,416 intermediate wave (3) would reach 2.618 the length of intermediate wave (1).

S&P 500 hourly bear 2015
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Upwards movement may be an incomplete single zigzag. At 2,086 minute wave c would reach 1.618 the length of minute wave a.

The idea presented with the first hourly bear chart also works in exactly the same way for this alternate. Upwards movement may also be a complete double zigzag.

Within minute wave c of the zigzag, minuette wave (iv) will only fit as a double zigzag if it is complete. But the first zigzag has a slightly truncated C wave. This reduces the probability.

If minuette wave (iv) is continuing lower, it may only do so now as a very rare triple zigzag. The rarity of this structure makes that a very low probability.

Minuette wave (iv) may not move into minuette wave (i) price territory below 1,962.96.

The breach of the channel is now substantial. This reduces the probability of this wave count, but does not eliminate it.



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

Volume data on StockCharts is different to that given from NYSE, the home of this index. Comments on volume will be based on NYSE volume data when it differs from StockCharts.

The small upwards day for Wednesday comes with lighter volume from both StockCharts and NYSE. There was not support for the rise in price, so it is suspicious. This supports the wave count.

Price may have found some resistance today at the horizontal trend line about 1,990.

ADX and ATR are still in agreement. The market is not trending; it is correcting. At the least, this agreement between these two indicators puts doubt on any analysis which expects to see strong bullishness. If this upwards move in price for the last eighteen days is a new bull market, it is not supported by trending indicators.

On Balance Volume has come again to touch the pink trend line. This line is highly technically significant because it is long held, repeatedly tested and almost horizontal. This may assist to hold upwards movement here.

RSI is well above neutral. There is plenty of room for this market to fall.

Stochastics needs to return from overbought. A range bound approach would expect some downwards movement about here to continue until Stochastics reaches oversold and price finds support.


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.

I am aware that this approach is extremely conservative. Original Dow Theory has already confirmed a major trend change as both the industrials and transportation indexes have made new major lows.

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

The lows below are from October 2014. These lows were the last secondary correction within the primary trend which was the bull market from 2009.

These lows must be breached by a daily close below each point. So far the S&P has made a new low below 1,821.61, but it has not closed below 1,821.61.

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 @ 08:13 p.m. EST.