|SP500 2-Hour Chart : Gap Filled|
As we said yesterday, further downward movement was possible, and was possible we were getting an ending diagonal c wave, lower. Not only was the gap filled, not only was the lower trend channel line attacked more vigorously, but, at the end of the day, it did look like an ending diagonal c wave did indeed form. At least as of the end of the cash close. And, so too, the Elliott Wave Oscillator remained in the acceptable range - staying within -12 currently.
In sort of a rare treat, I'm going to provide this SP500 15-minute chart from the live chat room so you can see how this potential ending diagonal c wave formed in near real time.
|SP500 15-Minute Chart - Potential Ending Diagonal|
As we stated before, we can not count the downward wave currently using The Eight Fold Path Methodology. Therefore, it seems best to call this wave corrective in nature, and not an impulse. We counted the five waves down to the a wave - live and in real time. And then things started getting whippy, murky, and compressed which is what made me think of a diagonal. We also had a clear triangle yesterday which I called in real time and which broke to the down side, and that was likely the (B) wave of wave ((3)) of the diagonal. Please remember, a double set of parentheses means the same as 'circle'.
So, at this point, here you have it: Wave ((5)) is less than ((3)), Wave ((3)) is less than ((1)), Wave ((4)) is less than ((2)), and Wave ((4)) overlaps wave ((1)) and each wave is a zigzag, currently fitting the definition of an ending contracting diagonal.
During live chat, I stated the limit of wave ((5)) as 2359.80, and that level held into the close with the day's low at 2361.01; and in looking this wave over after the heat of battle, I realize it is possible but not necessary at this point to move wave ((4)) to where (B) of ((5)) is. In other words, it is possible the (C) wave of ((4)) truncated slightly. That would allow the invalidation to be moved down about a point to 2358.50, but that's it.
Still, diagonals are waves that must prove themselves, and regardless of what happens in the futures overnight, it is this cash count that must hold. The Dow Jones Industrial Average also made lower lows today, so it seems, for now, these two markets are in gear. Let's see what tomorrow does to the structure.
Currently, with three-waves down, at least three waves more up could be expected, if downward movement ends in this area and the upper diagonal trend line is broken to the up side.
Until then, have a great evening.