This analysis offers detail of how subdivisions are seen within the last bull market which was from March 2009 to May 2015.
Summary: This movement subdivides neatly 5-3-5. This is how 1-2-3 of an unfolding impulse subdivides, and it is also how A-B-C of a zigzag subdivides. The bear wave count sees it as a zigzag. The bull wave count sees it as an incomplete impulse.
CYCLE WAVE A
This piece of movement is seen as cycle wave a for the bear wave count and cycle wave I for the bull wave count.
This movement subdivides as a five wave impulse. Primary wave 2 fits as a shallow zigzag and primary wave 4 fits as a more shallow running contracting triangle. There is perfect alternation. There is reasonable proportion: primary wave 4 lasted 86 days while primary wave 2 lasted 47 days. Triangles are more time consuming structures than zigzags.
The only problem I have with this wave count is within the triangle for primary wave 4: the B-D trend line is overshot for two days. Triangles most normally adhere very well to their trend lines, but almost always is not the same as always so occasionally they may be slightly overshot. All rules for a running contracting triangle here are met.
Fibonacci ratios at primary and intermediate degree are noted on the chart. Only primary wave 5 does not exhibit a Fibonacci ratio to either of primary waves 1 or 3. This is pretty typical of the S&P; it will often exhibit a Fibonacci ratio between two of its three actionary waves and not very commonly between all three.
All Elliott wave rules are met for this wave count.
CYCLE WAVE C
This piece of movement is seen as cycle wave c for the bear wave count and cycle wave III for the bull wave count.
Cycle wave c subdivides perfectly as an impulse.
There is some alternation in depth between primary waves 2 and 4: primary wave 4 is very shallow and primary wave 2 is deep. There is no alternation in structure though as they are both zigzags.
There is an exceptional Fibonacci ratio at primary degree: primary wave 3 is just 0.76 points longer than 2.618 the length of primary wave 1. With primary wave 3 a long extension in price and time lasting 455 days in total, the ratio here is very close indeed.
Intermediate wave (5) completed as an ending contracting diagonal. The 1-3 trend line was overshot at the final all time high, giving the diagonal a typical look. The classic technical analysis equivalent is a rising wedge.
Again, all ratios at intermediate and primary degree are noted, including instances where no ratio was seen. At cycle degree, cycle wave c was 55.97 points short of 1.618 the length of cycle wave a. I consider a wave length to exhibit a Fibonacci ratio if the variation from the exact calculation is less than 10% of the length of the wave. Here 55.97 is less than 10% of the total length of cycle wave c which was 1,059.95 points. Such a definition seems reasonable.
The double cyan trend line is drawn using the approach outlined by Magee in “Technical Analysis Of Stock Trends”. This is a simple approach to find support for a bull market. When the trend line was breached by a close of 3% of market value, it indicated a trend change from bull to bear.
After the lower cyan trend line was breached, it then provided resistance for a throw back.
No matter how this bull market is seen in the bigger picture, it will only meet Elliott wave rules if it is part of a zigzag, a multiple zigzag or an impulse. If the S&P is seen as within a bull market, then this movement must be seen as part of an impulse.
If this movement is seen as a multiple zigzag (which could be forced to fit, but some Fibonacci ratios would be lost), then it could only be part of a larger bear market.
This analysis is published @ 06:16 p.m. EST on 4th June, 2016.