Movement slightly above 1,654.19 has given us clarity for the structure unfolding on the main wave count. However, both the main and alternate wave counts remain valid.
At this stage I would now expect they have a closer to even probability. We need to see price break above 1,687.18 or below 1,560.33 to have one wave count confirmed and the other invalidated.
Click on the charts below to enlarge.
It is a good time to have a quick review of the bigger picture on a monthly chart.
This main monthly wave count sees the S&P 500 in a big supercycle flat correction for a second wave.
Within the flat correction cycle wave a was a three wave structure. Cycle wave b is a three wave structure, a double zigzag, which is either complete or has one smaller final fifth wave upwards to complete. So far cycle wave b is a 118% correction of cycle wave a indicating that supercycle wave II is an expanded flat correction.
The big maroon channel drawn about cycle wave b shows perfectly where price recently found resistance. When this channel is clearly breached with downwards movement on the monthly chart we shall have confirmation that cycle wave b is complete and cycle wave c is underway.
Cycle wave c should last one to several years and should take price substantially below the end of cycle wave a which was at 666.76. It is extremely likely to at least make a new low below 666.76 to avoid a truncation and a rare running flat.
Main Wave Count.
The widest maroon channel is copied over from the monthly chart and contains all of cycle wave b. It may be that price found final resistance at the upper edge of this channel.
The black channel in the middle is drawn about the zigzag of primary wave Y. Draw the first trend line from the start of primary wave Y to the end of intermediate wave (B). Place a parallel copy upon the extreme within intermediate wave (A). The upper edge of this channel also may be where price found resistance and where intermediate wave (C) ended.
The smallest blue channel is the most conservative best fit I can see for intermediate wave (C). It is very clearly breached by downwards movement. Yesterday price broke through resistance at the lower edge of this channel.
What would give me confidence in this trend change is a clear breach of the black intermediate degree channel. When that is breached I will calculate long term downwards targets for you.
There is no classic technical divergence between price and MACD on the daily or weekly charts. This is possible, but unusual for the S&P 500. This must reduce the probability of this wave count. We must seriously consider the alternate.
There are no Fibonacci ratios between minor waves 1, 3 and 5 within intermediate wave (C). There is no Fibonacci ratio between intermediate waves (A) and (C). This lack of Fibonacci ratios slightly reduces the probability of this main wave count.
Minor wave 1 must be unfolding as a leading diagonal. Within the diagonal minute wave i is complete. Minute wave ii is either complete or very close to completion.
Minute wave ii may not move beyond the start of minute wave i. This wave count is invalidated with movement above 1,687.18.
Minute wave ii is now 0.77 the length of minute wave i which is still within the common range for second waves of diagonals, between 0.66 and 0.81. This wave count still has a typical look.
We may draw a parallel channel about the zigzag of minute wave ii. Draw the first trend line from the start of minuette wave (a) to the end of minuette wave (b), then place a parallel copy upon the end of minuette wave (a). We need to see this small channel clearly breached by downwards movement to have confirmation that the zigzag of minute wave ii is complete and the next movement is underway.
Minute wave iii must move beyond the end of minute wave i to make a new low below 1,560.33. At that stage we may have confidence in this wave count both at the hourly and daily chart levels.
Minute wave ii may not move beyond the start of minute wave i. This wave count is invalidated with movement above 1,687.18.
Alternate Wave Count.
Minor wave 4 is out of proportion to all the other corrections within intermediate wave (C) and clearly breaches a channel containing intermediate wave (C) no matter how that channel is drawn. Sometimes fourth waves do this and so we must consider this possibility.
Within intermediate wave (C) minor wave 3 is 23 points longer than 4.236 the length of minor wave 1.
The lack of classic technical divergence between price and MACD supports this wave count. A final fifth wave up with slowing momentum would provide divergence and give a typical look in terms of momentum.
At 1,740 intermediate wave (C) would reach equality with intermediate wave (A). At 1,747 minor wave 5 would reach 0.618 the length of minor wave 3.
Minor wave 4 may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,409.16.
At the hourly chart level for this alternate today it is possible that minuette wave (ii) is over, but it would be more likely that it should move a little lower and take a little longer because it looks too shallow and brief here.
The invalidation point for this alternate must remain at 1,604.57. Minuette wave (ii) may not move beyond the start of minuette wave (i).
The target remains the same. At 1,701 minute wave iii would reach 1.618 the length of minute wave i.
We may have full confidence in this wave count if price moves above 1,687.18. At that stage the main daily wave count would be firmly invalidated.