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S&P 500 Historical Analysis – Update 18th September, 2012

At this stage I have three monthly wave counts.

The first two have about an even probability at the time of writing.

The first is mid term bullish. The second is short term bullish and mid term bearish.

The alternate monthly wave count is extremely bullish.

If price moves below the invalidation point for the first monthly wave count the second will be confirmed. If price does not break below this point then we should assume that the trend remains the same.

This analysis will be updated if any of these three monthly wave counts is invalidated, or if the probability of any one of them changes significantly.

Continue reading S&P 500 Historical Analysis – Update 18th September, 2012

S&P 500 19th May, 2011

Elliott Wave chart analysis for the S&P 500 for 19th May, 2011. Please click on the charts below to enlarge.

I have a few members who are colour blind and in response to their requests to make the labels on the charts more readable I have altered the labels’ font size and made each degree of labeling alternate from oblique to regular font styles. To view the new wave notation table (version 2) go here. Please let me know if the new wave notation makes it easier for you to read the labels on the charts, whether you’re colour blind or not.

S&P 500 daily 2011

As expected the S&P 500 moved higher during Thursday’s session.

Because the last downwards wave moved into wave 1 pink price territory this may not be wave 4 pink. Wave 3 pink must be developing as an extended wave. We may expect momentum to increase as we move towards the middle of this third wave.

Corrections within this upwards wave may find strong support at the lower end of this trend channel on the daily chart.

It is possible that this third wave may break through the mid line and move into the upper half of the channel.

Targets remain the same. At 1,553.42 wave 5 blue will reach equality with wave 3 blue. At 1,564.02 wave C black will reach equality with wave A black. This is our long held target zone for upwards movement to end.

S&P 500 hourly 2011

Upwards movement is finding some resistance close to the upper edge of the trend channel here on the hourly chart.

We have the first completed five wave structure upwards now on the hourly chart with a very brief and shallow second wave correction to follow it.

Ratios within wave 1 purple are: wave 3 aqua is 1.39 points short of 1.618 the length of wave 1 aqua and wave 5 aqua is just 0.52 short of wave 1 aqua.

The following upward movement labeled 1 aqua is an impulse on the 15 minute chart and so this may be wave 1 aqua of wave 3 purple. It cannot be a B wave of a flat correction.

Any further downwards movement of wave 2 aqua may not move beyond the start of wave 1 aqua. This wave count is invalidated with movement below 1,336.36.

The short to mid term target for wave 3 green remains the same. At 1,392.77 it will reach 1.618 the length of wave 1 green.

S&P 500 18th May, 2011

Elliott Wave chart analysis for the S&P 500 for 18th May, 2011. Please click on the charts below to enlarge.

S&P 500 daily 2011

The S&P 500 has behaved exactly as expected during Wednesday’s session. We should expect this upwards trend to continue towards the targets here on the daily chart.

Because the last downwards wave moved into wave 1 pink price territory this may not be wave 4 pink. Wave 3 pink must be developing as an extended wave. We may expect momentum to increase as we move towards the middle of this third wave.

Corrections within this upwards wave may find strong support at the lower end of this trend channel on the daily chart.

It is possible that this third wave may break through the mid line and move into the upper half of the channel.

Targets remain the same. At 1,553.42 wave 5 blue will reach equality with wave 3 blue. At 1,564.02 wave C black will reach equality with wave A black. This is our long held target zone for upwards movement to end.

S&P 500 hourly 2011

We have just the one hourly wave count today. As upwards movement develops further there will be alternate wave counts but at this early stage we should only need one.

Upwards movement is clearly impulsive compared to prior downwards movement which is more choppy and overlapping. Wave behaviour supports this wave count.

Movement above the orange trend channel would provide strong confirmation of this wave count.

Wave 3 aqua has no fibonacci ratio to wave 1 aqua. It is more likely then that wave 5 aqua will exhibit a ratio to either of 1 or 3 aqua. At 1,348.91 wave 5 aqua will reach equality with wave 1 aqua. About this point we may see a small second wave correction, before price continues higher.

At 1,392.77 wave 3 green will reach 1.618 the length of wave 1 green.

The upcoming second wave correction may not move beyond the start of wave 1. This wave count is invalidated with movement below 1,318.51.

S&P 500 17th May, 2011

Elliott Wave chart analysis for the S&P 500 for 17th May, 2011. Please click on the charts below to enlarge.

S&P 500 daily 2011

Downwards movement for Monday’s session invalidated the main hourly wave count and confirmed the alternate. This zigzag for wave 2 green has extended lower and now has a small overshoot of the parallel channel containing wave C black upwards. An overshoot is acceptable but a channel breach is not.

Technically wave 2 green may move down to the start of wave 1 green at 1,294.70 but not below. Movement below 1,294.70 would provide strong evidence of a trend change at primary degree.

The structure for wave 5 blue is incomplete. Wave 5 must subdivide into a five wave structure, either an ending diagonal or an impulse. At this stage it looks like only four and requires at least one more wave upwards to complete a five wave structure. It is barely possible that the final fifth wave was truncated but I do have an alternate today for this idea.

Targets remain the same. Wave 5 blue has an extended third wave at pink degree within it. At 1,553.42 wave 5 blue will reach equality with wave 3 blue. At 1,564.02 wave C black will reach equality with wave A black. This is our long held target zone for upwards movement to end.

Main Hourly Wave Count.

S&P 500 hourly 2011

Further downwards movement was expected yesterday to be highly unlikely; the alternate wave count had a very low probability. The problem with low probability occurrences is that they do occur. We always expect the most common outcome but that does not mean we will always get it.

Further downwards movement has lengthened wave C orange. It is now just a bare 0.48 points short of equality with wave A orange.

Ratios within wave C orange are: wave 3 purple has no ratio to wave 1 purple and wave 5 purple is just 0.87 short of 0.382 the length of wave 3 purple.

Ratios within wave 3 purple within wave C orange are: wave 3 aqua is 1.7 points short of equality with wave 5 aqua and wave 5 aqua is 2.32 points short of 4.236 the length of wave 1 aqua.

Ratios within wave 3 aqua within wave 3 purple within wave C orange are: wave 3 red is 1.85 points short of 2.618 the length of wave 1 red and wave 5 red is just 0.09 points short of 0.618 the length of wave 3 red.

Movement above 1,336.36 would provide some confirmation of this wave count as that is where the alternate is invalidated. Further upwards movement above the orange parallel channel would provide trend channel confirmation of a trend change.

If this wave count is confirmed we should expect upwards movement to continue towards 1,392.77 where wave 3 green will reach 1.618 the length of wave 1 green.

Alternate Hourly Wave Count.

S&P 500 hourly 2011

It remains possible that wave C orange is incomplete. While price remains below 1,336.36 this wave count will remain valid.

Wave C orange will reach equality with wave A orange at 1,318.03. This target allows for a very slightly lower low before this trend is over.

Within wave C orange wave 3 purple has no fibonacci ratio to wave 1 purple and at 1,314.92 wave 5 purple would reach 0.618 the length of wave 1 purple.

This target zone would allow for another daily candlestick to overshoot the trend channel on the daily chart before price turns back upwards into the channel for the next wave up. This would be acceptable, as long as we do not see a full candlestick outside the channel.

Ratios within wave 1 purple of wave C orange are: wave 3 aqua has no fibonacci ratio to wave 1 aqua and wave 5 aqua is just 0.36 short of 0.618 the length of wave 1 aqua.

Within wave 2 purple expanded flat correction wave B aqua is a 165% correction of wave A aqua and wave C aqua is 1.51 points longer than 2.618 the length of wave A aqua.

Ratios within wave 3 purple are: wave 3 aqua is 1.12 points longer than equality with wave 1 aqua and wave 5 aqua is 0.49 short of 0.618 the length of wave 1 aqua.

Wave 4 purple is an incomplete zigzag and requires a little further upwards movement. When that is done this wave count expects a final downwards fifth wave to end this structure.

Wave 4 purple may not move into wave 1 purple price territory. This wave count is invalidated with movement above 1,336.36.

Alternate Daily Wave Count.

S&P 500 daily 2011

With the small overshoot of the parallel channel on the daily chart this possibility is one we may want to consider.

It is barely possible that wave 5 blue was over as an ending contracting diagonal with a truncated fifth wave.

It seems very difficult to see waves 1 and 3 pink as zigzags. If they were we would expect them to have a strong three wave look, like the zigzag labeled 5 pink. They do not and are very easily counted as impulses.

If price moves below 1,294.70 our main wave count will be invalidated and we would have a strong trend channel breach on the daily chart. At that stage we may be fairly confident that primary wave 3 may be underway.

Movement above 1,359.44, the end of wave 5 pink, would invalidate this wave count. No second wave correction may move beyond the start of the first wave.

S&P 500 16th May, 2011

Elliott Wave chart analysis for the S&P 500 for 16th May, 2011. Please click on the charts below to enlarge.

S&P 500 daily 2011

We have seen a little further downwards movement which has invalidated two of our three hourly wave counts.

We expected any further downwards movement for this second wave correction to find support at the lower end of the parallel channel here on the daily chart. Wave 2 green is almost touching this trend line and so may be over here. A third wave of a third wave should begin from this point.

Wave 5 blue has an extended third wave at pink degree within it. At 1,553.42 wave 5 blue will reach equality with wave 3 blue. At 1,564.02 wave C black will reach equality with wave A black. This is our long held target zone for upwards movement to end.

Any further downwards movement for wave 2 green is highly unlikely, but if it did move downwards, wave 2 green may not move beyond the start of wave 1 green. This wave count is invalidated with movement below 1,294.70.

Primary wave 2 may not move beyond the start of primary wave 1. This wave count is invalidated with movement above 1,576.09.

Main Hourly Wave Count.

S&P 500 hourly 2011

I have reanalysed wave C orange downwards. Each subwave may be seen as a zigzag and so this may be an ending contracting diagonal which was over during Monday’s session.

Wave 3 purple of the diagonal on the hourly chart looks like a five wave impulse but when seen on the 15 minute chart it has a corrective count of 7. I expect it was most likely a zigzag.

Within wave 2 green zigzag there is no ratio between waves A and C orange.

There is nice alternation between waves A and C: wave A orange was an impulse and wave C a diagonal.

Within wave C orange ending diagonal wave 2 purple is a 69% correction of wave 1 purple and wave 4 purple was a 62% correction of wave 1 purple. Wave 5 purple has overshot the 1-3 trend line which is exactly what we should expect to see for an ending diagonal.

At 1,450.94 wave 3 green will reach 1.618 the length of wave 1 green. This target may be reached in a week or two.

For the first time in about 2 weeks I am confident in saying that there is a very high probability that this correction is finally over. All subdivisions are complete, structures look typical, and price may have found strong support at the lower trend line on the daily chart. If it does move any lower it may not be by much at all as the trend line is very close.

Price movement above 1,359.44 will give us added confidence in this wave count. At that stage the alternate below will be invalidated.

I present the alternate below as an outlier which we must consider. I expect it has a very low probability.

Alternate Hourly Wave Count.

S&P 500 hourly 2011

If we simply move the degree of labeling within the more recent downwards movement for wave C orange down one degree then we may have only seen wave 1 leading contracting diagonal within wave C orange.

Wave 2 purple may not move beyond the start of wave 1 purple. This wave count is invalidated with movement above 1,359.44.

This wave count has a very low probability primarily because it requires movement outside the parallel channel containing wave C black impulse upwards on the daily chart. While wave C black is still in progress we expect price to be well contained within this trend channel.