4th Wave Triangle Prelude to Final Thrust Up in Ending Diagonal?
Following my count of the S&P 500 since the minor "scare" decline in October 2014 as being an ending diagonal pattern, it looks to me as though the diagonal is now within the 5th and final wave. This final wave appears to be "extending", if you will, whereby the internal count of it can be labeled as 4 complete waves thus far (while still maintaining the overall appearance of three complex waves). The interesting thing is that the 4th wave appears to be a triangle. The triangle, if the extremes of it are correctly counted, implies an upward thrust of about 47 ticks from the low end of wave "E". We may generally assume that triangle wave "E" will end near the triangle's lower trendline or at its greatest extent not lower than the extreme of wave "C" of the triangle. From that area, a spike to about 2150 would be expected.
Another point worth mentioning is that a 3rd wave may not be the shortest wave of an impulse or of an ending diagonal. Assuming correct counting of waves "1", "2", "3", "4" and "5" in my chart, the implication is that the maximum height of wave "5" would be 2184.7. Similarly, assuming correct counting of wave "5"'s internal waves, wave "v(circle)" would not exceed 2173.9. In both cases, the rationale is that because the 1st wave in each of these two impulse sequences is already longer than the 3rd, then the 5th wave needs to be shorter than the 3rd wave to meet the rule. This offers two targets within close proximity, and the lower target would necessarily take precedence. Both targets would support the supposition that the final wave up of an ending diagonal results in a throwover at the diagonal's upper trendline before the market reverses its trend.
Whether the post-triangle thrust mentioned above might be the stem of a continued rise to a final apex above 2170 remains to be seen. I also leave room for the view that this impulse may just be heading up to complete a third wave rather than a 5th, but the triangle seems self evident as a hint of a sharp spike upward very soon.
Another point worth mentioning is that a 3rd wave may not be the shortest wave of an impulse or of an ending diagonal. Assuming correct counting of waves "1", "2", "3", "4" and "5" in my chart, the implication is that the maximum height of wave "5" would be 2184.7. Similarly, assuming correct counting of wave "5"'s internal waves, wave "v(circle)" would not exceed 2173.9. In both cases, the rationale is that because the 1st wave in each of these two impulse sequences is already longer than the 3rd, then the 5th wave needs to be shorter than the 3rd wave to meet the rule. This offers two targets within close proximity, and the lower target would necessarily take precedence. Both targets would support the supposition that the final wave up of an ending diagonal results in a throwover at the diagonal's upper trendline before the market reverses its trend.
Whether the post-triangle thrust mentioned above might be the stem of a continued rise to a final apex above 2170 remains to be seen. I also leave room for the view that this impulse may just be heading up to complete a third wave rather than a 5th, but the triangle seems self evident as a hint of a sharp spike upward very soon.