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The S&P 500 and other indexes may be forming a triple top with the April, July and possible upcoming early September top(see chart below). That formation which is being telegraphed by typical wave pattern relationships and technical/cyclical indicators could possibly be counted as an ending diagonal which would be very bearish. This indicated 3rd swing up from the August 5th low would be about a 7 1/2% rise.
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| Chart of S&P 500 showing possible upcoming triple top(blue arrow)
Update 8/21/2019:
According
to the Elliott Wave rules, if a 3rd SP500 top(wave 5) is formed in
early September and it goes above the July high(yellow dashed line on
attached chart), a leading diagonal OR ending diagonal could be
indicated. They can also have different wave structures so that will
have to be looked at also.
If
a 3rd SP500 top is formed in early September and it stays below the
July high, only an ending diagonal could be indicated as leading
diagonal rules require that the 5th wave goes above wave 3. This
scenario could also possibly be counted as an X wave at the July high.
Although
ending diagonals are more common then leading diagonals, I am leaning
toward the leading diagonal count which would then be followed by waves 2
through 5 of a possible 5th wave impulse over the coming one to several
years. The ending diagonal count would be very bearish as it could
indicate the end of the entire move up from the 2009 low.
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Today's weak price action reduces the chances that a diagonal is forming and It also increases the likelihood that lower prices will continue for at least several more weeks. It is still possible however but would require a 6% upmove into early September. In any case, indicators show there could be a 1-2 week rebound which may begin within the next 1-3 trading days which could allow for the leading diagonal or right shoulder of a head and shoulders top scenarios to unfold. If the July high was the top then that would probably be labeled as the top of an X wave.
Update 9/5/2019:
The leading diagonal wave pattern now appears to be the most likely outcome as originally described on 8/8/19. This would form a triple top with the April, July and anticipated September highs. The end of next week around Friday looks like the most likely time for that to occur.
Update 9/16/2019:
If last weeks highs hold, none of the major indexes made a new yearly high in September. If a diagonal was formed it can only be an ending diagonal according to the rules. It could also be counted as an X wave at the July top which is what I am leaning toward. The X-wave count can also be identified as a head and shoulders top. All of these counts are bearish and the July high may hold until the end of year at the minimum.
Update 10/04/2019:
Technical and cyclical indicators are showing a possible retest of the September
high within the next 3-5 weeks. If it goes above the September high that would
invalidate the ending diagonal count at the September high although the X wave
count would still be valid. See chart of S&P 500 below.
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| Chart of S&P 500 index with projection arrow. (click to enlarge) |
Stocks may be on the verge of a multi-week decline as it is possible to get a completed wave count from the October low and as shown by the technical/cyclical indicators. I would not rule out another retest of the October high however. The diagonal count is also not necessarily invalidated yet by the move above the July/September highs.
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| S&P500 chart with arrow showing possible direction |
