None-the-less, the potential wave count did serve as an excellent "tell" precisely because we can now know for sure that we are not in a diagonal. (See post William Tell).
That being said, there are about 115 candles on this chart of the hourly S&P500 Index, and so that tends to indicate with today's sharp downward movement and lack of a new all-time-high in the afternoon, that a triangle might be in progress instead of a diagonal.
The rationale is below the chart.
|SP500 Index Hourly - Potential Running Triangle|
Examing the chart, we see that wave (iii) of ((iii)) is on the maximum of the Elliott Wave Oscillator, at a 2.618 Fibonacci extension, and wave (v) of ((iii)) is on the first divergence. If we look at the lengths of the corrections - just in terms of time, not price - we see that no correction, so far, has been remotely long enough to correct the strong minute ((iii)) wave in terms of the time taken by the advance.
And, if we look solely at alternation, we see that wave (iv) alternates with wave (ii) since wave (iv) is a short sharp, and wave (ii) is a long flat. But, then we see that wave (a) down of the potential triangle would not alternate well with minute wave ((ii)) lower at the bottom of the chart. In fact, they are the same shape! So, this suggests that we need a wave that is long enough in time to provide a decent length of a correction for minute wave ((iii)), and one that will alternate with minute wave ((ii)). A decent triangle would do that at this point in time. I have sketched in the potential triangle.
Tonight and tomorrow, I would watch to see if 2359.50 is exceeded lower in the futures, as that is the low of the B wave that was counted in this afternoon's upward waves. If that is exceeded lower, then most likely, a downward wave is in progress. Of course, a low below 2353.00 futures would solidify the correction in progress, and the invalidation point is the high of today's cash C wave upward at 2366.40 (cash), as a running triangle like this one must contract.
And, there is a reason I have not suggested a flat wave for the type of correction, even though a flat might provide the needed alternation. The (b) wave of this triangle is just inside a 2.618 extension on the (a) wave. That most likely means a "running correction" is in progress, and, again, a "running" triangle would fit that bill.
Such a correction might get us to the end of the month until the new month begins with the possibility of inflows from pension funds, bonuses, 401k's, etc.
This weekend I will address the "most likely" alternates as price moves forward - even though we have been correct, so far, that price is finding some resistance at the channels shown yesterday on the linear and log charts. Is it perfect? It seldom is.
A word for those following Gold. It can now be counted that Gold can have "five waves up" in the form of a contracting diagonal, with today's higher highs. Nothing rules out a B wave as a triple zigzag - since every contracting diagonal must be comprised of three zigzags. But, I wanted to at least confirm that "five waves up" can be counted (although there may be one or two more slight new highs to go.) The chart is below.
|GOLD Futures - 4 Hours - Five Waves Up Can Now Be Counted|
One point being, in order to even make this count, one needs to learn how to be able to count diagonals (leading and ending, expanding and contracting), and triangles, because they are all legitimately there, and shown in near real-time.
In the overall count, at the present time, wave 5 is shorter than wave 3, wave 3 is shorter than wave 1. Wave 4 is shorter than wave 2, wave 4 overlaps wave 1, and they are all zigzag sequences. So, a contracting diagonal is currently valid, provided that wave 5 remains shorter than wave 3. Wave 3 was 0.618 the length of wave 1, so there may be a similar relationship between wave 5 and wave 3. Then, if it really is a contracting diagonal, the low of 0 must hold. If the whole structure is a triple zigzag B wave, the low of 0 might break.
Truth be told, I do not like diagonals and triangles very much: they are murder on the nerves. But, it is not possible to follow the rules of Elliott Waves unless one learns to manage them. That's some food for thought.
Cheers! And have a good night!