Price moved sideways in a very small range. The wave count remains valid. Price did not break out of a small range and both hourly wave counts remain the same.

Click on the charts below to enlarge.

We have recently seen a major trend change in the S&P 500 and the DJIA. This wave count sees the trend at primary degree, so targets are long term and they are months away.

Within the new downwards trend we may be seeing a series of first and second overlapping waves complete. The most commonly extended wave within an impulse is the third wave, and within wave iii pink we should expect wave (iii) green to likely be extended. This necessarily begins with a series of overlapping first and second waves, and this wave count has a very typical look.

Cycle wave a is an expanded flat correction: primary wave A was a three wave structure, and primary wave B was a triple zigzag and 140% the length of primary wave A.

At 1,013 primary wave C would reach 1.618 the length of primary wave A. If price continues downwards through this first target then the next target is at 728 where primary wave C would reach 2.618 the length of primary wave A.

I have tried to see various combinations of a leading diagonal in the first waves after the high of 1,474.51 labeled primary wave B. I cannot find a scenario which fits expected wave lengths for a diagonal, and it would be neither expanding nor contracting. This scenario charted has a much higher probability.

Main Hourly Wave Count.

At first glance sideways movement during Friday’s session looks like a contracting triangle for a fourth wave. However, the subdivisions do not fit well enough to consider it seriously.

Wave 5 red cannot be over because a new high beyond the end of wave i teal within wave 5 red was made.

Wave 5 red may be extending. The target remains the same. At 1,425 wave 5 red would reach equality in length with wave 1 red. At 1,426 wave (C) aqua would reach 0.618 the length of wave (A) aqua.

Movement above 1,419.70 would confirm this wave count. At that stage we may have more confidence in the target.

Movement below 1,409.17 to a new low below the start of wave 5 red would indicate that wave 5 red is over and therefore wave 2 purple in its entirety would likely be over.

Movement below the channel drawn here using Elliott’s technique would indicate a trend change.

Movement below 1,385.43 would confirm a trend change as at that stage the alternate wave count below would be invalidated.

Alternate Hourly Wave Count.

It looks like wave (Y) aqua is unfolding as a second zigzag and so wave 2 purple could be a double zigzag.

Within wave (Y) aqua wave B red did not move down to 90% the length of wave A red and wave (Y) aqua cannot be a flat correction. Wave A red must have ended with a truncated fifth wave.

Wave C red would have begun at the end of Friday’s session. This structure is incomplete and requires further upwards movement. At 1,432 wave C red would reach 0.618 the length of wave A red.

The purpose of a double zigzag is to move price higher, in contrast to the purpose of a double combination which is to move price sideways. If wave 2 purple is a double zigzag we would expect the correction to continue higher.

Within wave (Y) aqua zigzag wave B red may not move beyond the start of wave A red. This wave count is invalidated with movement below 1,385.43.