S&P500 Wave Count Update

Two week chart of S&P500, click to enlarge

Above is a two year chart of the S&P500 showing the current wave counts.

The previous blog update on September 14th labeled the move down from the May top as major wave Y of primary wave B(nearing completion) with a 1st price target for primary wave C near the July highs.

Major wave Y bottomed about 3 weeks later on October 4th with just a one day close below the August low. The subsequent primary wave C 1st wave then blasted up toward that 1st price target but did not quite reach it.

As mentioned previously in the blog and Twitter updates, Primary wave C should be either an impulse or ending diagonal in order to complete a zigzag from the March/2009 lows. As shown in the chart, major wave 1 of primary wave C ended at the October 27th high, major wave 2 ended at the November low and major wave 3 is now in progress. The waves thus far have been mostly three wave structures which indicates primary wave C is forming an ending diagonal, not an impulse.

An alternate count shown has major wave Y of primary wave B ending at the November low. That count would have the same outlook as the preferred count from the bottom of major wave Y. Another possibility is that a triangle ended at the December low, and that would also have the same outlook.

The price resistance shown and also mentioned in the tweets is at 1298 to 1310 and around the May high. Perhaps major wave 3 will top in that 1st price zone and major wave 5 in the 2nd price zone. I am looking for that wave 5 top to occur by late March at the latest and mid January at the earliest.

S&P 500 Updated Wave Counts

Three year chart of S&P 500 etf  SPY, click to enlarge

Above is a three year chart of the S&P 500 etf SPY showing updated wave counts. The move up from the July/2010 low to the May/2011 high (major wave X of primary wave B) does not count well as an impulse. Since the wave up from the March/09 low to the April/2010 high (primary wave A) is best counted as an impulse, primary wave C should be an impulse or diagonal in order to complete a zigzag from the March/09 low. Major wave X of primary wave B does not meet that requirement, so it must be part of a primary wave B.

Primary wave B may now be forming wave D of a triangle from the Summer highs to be followed by wave E which may complete by the last week of this month. The completed triangle would be major wave Y of primary wave B. Once primary wave B is complete, primary wave C would end somewhere above the May/2011 high and possibly above the 2007 high. A close below the August 9th low may invalidate this outlook.