Tuesday, June 25, 2013

SPX Daily Chart E-Wave Patterns

The Elliot Waves for the 7-month stock market rally follow the rules.  Wave 3 is the longest wave for the impulse waves on the way up, and the wave 2 corrective wave does not retrace the Wave 1 starting point, and the Wave 4 corrective does not move lower than the top of Wave 1. So it is a valid E-wave pattern that ends with the May top.  The whole 5-wave move can be called an impulse move which leads into the corrective move now ongoing. The red lines show a typicaly 3-wave corrective move with an impulse Wave A to 1598, then a corrective Wave B back up to 1650-ish, then a Wave C downward impulse wave that is yet to be determined. The Wave C typically ends around the bottom of the Wave 4 from the impulse move pattern which is in the 1530-1550 area. Interestingly, Wave C has not yet ventured near 1550.

So the thought now is where does Wave C end? Also, is the corrective move going to be a standard-style 'a-b-c', or, will the downward path lead into a 5-wave down move? Since price only hinted at nearing the Wave 4 bottom yesterday, there should be some further downside to print more in line with Wave 4 and complete the C wave. So, perhaps a quickie up move to play around at 1600-ish, then back down to the blue circle area. Of course the bulls will want yesterday's move to be close enough for government work to the Wave 4 bottom, and mark a new bottom where they can begin a new 5-wave upward pattern. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.


  1. :)))
    Where is that Anon that had a problem with Elliot waves ? :) ...just joking :D! :)

    ''So the thought now is where does Wave C end? Also, is the corrective move going to be an a-b-c, or, will the downward path lead into a 5-wave down move?''

    this 4'th wave had multiple internal failures (in wave Minor A) and a more complex appearence than what I have seen until now.
    Usually, when Minor A and Minor B don't have clear internal structures but tend to register internal failures , Minor C will end in a corrective way (a-b-c), not in an impulsive way.

    As numeric target, 1530-1550 might be, but also if minor A = minor C the 4th wave might (!) have already finished at 1560.
    Now it's all a question if Minor C extends (fibonacci based) or not. At 1560 the minimum int 4th have been met.

    That's why I've said at a previous comment that we should watch carefully how market behaves in the 1597-1606 area - to observe the nature of market moves after the test.


    1. V, the a and c waves almost match identically in their drop of about 90 handles just as you say. That is interesting about the Wave 4 bottom in April. Intraday back then, the low was 1537-ish and closing low at 1543-ish. Yesterday's low was 1560-ish, still remaining about 17 points away from the closing low back then.


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