SPX Wave 4 - Red count

SPCFD:SPX   S&P 500 Index
Just posting this here for the benefit of anyone who missed it in the chat room.

This is one of the counts I've been tracking on SPX since the summer, and updating in real-time since November. The premise is that P.3 topped in January, and the subsequent run-up was a big (B) wave forming an expanded flat with the higher high in September, followed by a nasty 2.382 drop which we're in now.

While 2.382 is larger than most typical corrective waves, we have precedent for this at the larger scale -- the 2011 correction. And in this case it would bring us to the level of the 2015 highs, which is an ideal target for P.4.

There are two ways to count the initial 1-2/i-ii of C, but both have roughly the same targets. So I'm going with the count that has a better-looking wave 3. Not much else to add, so far this is playing perfect Fibonacci Pinball.
Comment: 12/26 Update - not much to add, this count is playing out nicely. Moved the 'iii' down to the 1.382 extension, but leaving other targets alone for now. We might already be topping in 'iv', or possibly just A of iv in which case the rest of iv should target a bit higher. See 1-minute chart -- it went parabolic, we're very overbought and have divergence, so we're topping in something.

Comment: 12/28 update - still not much to add, this count is still playing out as shown. We seem to have topped in 'iv' today, so I moved the marker in. Other targets remain unchanged.

Comment: 1/4 Update - not invalidated, but (iv) is starting to get too big for wave 4 of that degree. Added purple "alt" labels and channel for another possibility, which could be taking shape as an ending diagonal. Next targets would likely be the 0.618 and 1.618 black fibs, but first we need to see where Alt-4 (or iv) tops before estimating the target for Alt-5 (or v).

Comment: 1/12 Update - removed (i)-(ii) subcount as wave (iv) invalidated the structure by overlapping wave (i), so the former purple "alt" count is now primary. Price this week came right up to the purple channel and encountered resistance. Expecting a drop to begin soon targeting the 1.618 black fib, which would be the 2.000 red fib of the larger (A)-(B)-(C) structure. I would prefer if it extended to the 2180-2200 region to retest the Aug. 2016 highs, but after such a deep retrace in 4 that is looking unlikely.

Comment: 1/19 Update - This count is still viable, though losing favor as the market blasted through resistance this week. To continue as a diagonal it needs to turn down VERY soon -- like Tuesday -- though at this point the expected drop would only retest the December low, possibly making a nominally lower low.

Comment: 1/29 Update - Not much to add... It's holding inside the purple channel since the last post, so this count is still on the table. Daily RSI is weakening, so a near-term drop is expected. Will it continue to follow this count all the way down to the target? Time will tell...


Umm, your (iv) is invalidated. 4th waves can't retrace more than .5 of (3). Your (iv) is no longer a 4 but start of something new. See my update on
nj_guy72 garyfung
@garyfung, Wave 4 is only invalidated when it overlaps wave 1, and that's only in a standard impulse. I did mention the possibility of a diagonal, where wave 4 usually (but not always) overlaps wave 1. But there's no hard-and-fast EW rule about size of retracements, just general guidelines. That said, I totally agree with your chart update that things are getting complicated. :-) I'm also open to the possibility that we may have bottomed on 12/26, but that's part of my Blue Count. Right now it's still up in the air what wave we're actually in, and what "macro count" we're following... that's why I'm tracking three different counts lol.
I target 2476 for .382 retrace of the smaller wave iii, so it hasn't got there today. It did briefly on ES1 futures. I'm selling my TQQQ if it hits.
nj_guy72 garyfung
@garyfung, yup right around where I have the micro iv waiting. It should hit somewhere in that region... we might get a "gap and crap" in the morning.
Correct wave count! Great Chart!
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