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Short

Concerning S&P Potential Decline to 1390

FX:SPX500   S&P 500 index of US listed shares
124 0 1
The wave structure from the high of 2137.2 in May through the peak of 2082.6 in December 2015 may have been the contracting triangle completing wave B up from the year 2009. The B wave would have been the second leg of the 4th wave down of Grand Supercycle degree which began with wave A down in the year 2000. The third leg, wave C down, may have started at the peak labeled wave 'E' at 2082.6.

If that is true, the decline from 2082.6 to 1810.9 was a first wave down of a much deeper decline to come in wave C. The three-wave rally which has so far retraced back up to the 2079 level would be a second wave which should indeed not exceed the 2082.6 origin of the first wave.

The decline from 2082.6 to 1810.9 does match quite precisely the post-triangle thrust measurement taken at the low point labeled 'B' (white), based on the converging trendlines drawn at the points shown in the chart.

The following rally's height is being supported by the measurement of expected retracement following that segment of thrust (shown by the green area), suggesting a retracement back to wave 'E' (actually suggesting more than total retracement, but the peak of 'E' would be the maximum scope that is theoretically possible)

However, 'B' (white) is not the true origin of the triangle. The true origin is the low of the year 2009 where wave 'B' (cyan) began. What I call "false triangle origin points" are the successively lower wave troughs feeding in to the triangle, along the way back to the true origin, which the "collective market consciousness" will temporarily interpret as origins of the triangle to generate consecutively deeper thrusts and corresponding retracements until the true thrust distance is reached.

Looking backward in time, the next lower trough which could be considered the next "false origin" for the triangle ended at 'E' would be 1832.1, the crash low of October 2014. A thrust measurement taken at that point, based on this triangle's parameters, extended downward from the peak of 'E', implies a minimum downthrust to 1389.6.

If 'E' is exceeded, I will reassess.
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