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Elliott Wave Analysis of the S&P-500 ES futures contract by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
The most recent whipsaw may be complete, and I think the S&P is getting close to starting into a move back to the bottom of the recent range. The fact that a large WXY combination correction can count as complete, (or nearly so), leaves those holding long equity positions in a high risk situation at this time, in my opinion.
Elliott Wave Analysis of the S&P-500 futures contract (ES) by Sid from Elliott WavePredictions.com. Click on the chart twice to enlarge.
The knee-jerk market reaction to “Operation Twist” was impulsively negative, and despite the fact that the S&P moved (so far) pretty much exactly to my target for wave b pink (see yesterday’s post), the down move today was so aggressive, I thought it would be prudent to show a more immediately bearish alternate wave count. If wave B burgundy really did end on September 20 (and I don’t think it did), and if wave C burgundy ends up equal in length and duration to wave A, the downward target for the ES contract is 974 on November 1. Also, wave C’s are just as commonly 1.618 times the length wave “A” was, which would make the target 825, according to this more immediately bearish alternate scenario.
Importantly, the reason I’m calling this count an alternate is because, according to my simple calculations, it would be rushing through the waves far too quickly. For instance, a primary (burgundy) degree wave generally takes far longer than 6 or 8 weeks to complete. And in the DAX, the complete 5-wave impulse down from July 8 thru Sept 13 reduced the value of that index by a full 34%, and in the handfull of days since has only managed to retrace a bit more than .236 so far. Even if you believe like Prechter does that the Dow Jones Industrials will bottom in June of 2016 at below 400, at the going rate, if wave 3 down was already getting underway, the DAX would near zero in less than a year . . an even more radical expectation than Dow 400 by June 2016.
The diabolical aspect to counting corrections (wave 2′s, 4′s, and b’s) is that there are so many potential internal wave forms for them to take. One thing I’m confident of though is that we’ve already seen a 5-wave impulse down from July 7 through August 21. According to Elliott, this cannot constitute the final extent of downward movement. That can only be wave A of an eventual downward ABC zigzag, or wave 1 of a downward impulse. Whether the correction that started on August 21 is finished or not, and no matter who’s wave count you prefer, we are almost certain to see the S&P substantially lower than it is now before this bear market is done.
That being said, even if we get a slight new low below the early August low within the next few trading days, the potential still exists that a corrective wave B burgundy would still be underway as an expanded flat, especially when considering that the DAX is very early in its yet incomplete corrective wave 2 structure. I’ll be showing how those alternatives and more would unfold in my LIVE Weekend Webinar.
Quick update on the S&P ES e-mini futures contract by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
The pink vertical lines are placed at the MACD line or MACD histogram extremes, and confirm the validity of this Elliott Wave count by matching up nicely with the wave 3 extremes throughout. Also, notice the sizeable MACD divergence showing on this 3-hr chart, which is a strong indicator that the downward momentum is spent for now.