|SP500 2-day Wedge Count|
According to this count, Minor 1 of Intermediate Wave (3) is the extended wave in the Intermediate (3) impulse (wave Intermediate (3) must now be an impulse in this scenario). The reason Minor wave 1 is the extended wave is that the Minor wave 2 pull-back also is quite shallow ~23% or less depending on whether you use futures or cash. Keep in mind the futures have overlap between what is shown above as Minor 2, and the initial Trump rally wave of early November.
That being the case, it would be typical for Minor 3 to extend to 0.618 times the length of Minor 1. That occurs at about 2266 - 2270 on the cash S&P. We can make an allowance for a 0.786 extension also, but in no case can Minor 3 be longer than Minor 1 in this count.
Personally, I think the 2266-70 high would fit best because then the fourth wave, Minor 4, would occur prior to the FED meeting next week. While I do think the FED will raise rates, the bond market has likely already discounted the raise with it's dramatic rise in yields. Then, you can see from the above chart, that, if Minor 4 is shallow enough, like a triangle or flat, that Minor wave 5 can easily reach the target of Intermediate Wave (3) = 0.618 x Intermediate Wave (1). Minor 5 in the above chart is drawn so that is it shorter than Minor 3, to meet all Elliott rules.
While I need to take one thing at a time here, the clear alternate (for the channel count presented yesterday) is that the 2266 - 70 level would only be minute i, of a much larger Intermediate (3). At this point in time, there is insufficient evidence for that count, but I can't rule it out.
Back to this wedge count, wave Intermediate (4) could surprise many with how deep it goes, but if it's the last wave in an impulse, it obviously can not overlap wave Intermediate (1). And, further, when we get there, the final wave Intermediate (5) could be an ending diagonal on a smaller scale. We'll see. Let's see how extensive price movement becomes.
We are still in wave Intermediate (3) until further updated. But things are beginning to get stretched. The futures now have three daily closes outside the upper Bollinger Band, and a return to inside the band will be needed in the next few days because the probability of staying outside of the band decreases with every additional day outside band without a close inside the band first. But closing inside the band does not mean that prices will decline enough to be meaningful. So, stay on guard and I'll do my best to update you in the short term.