After the S&P 500 (SPX) 01/04/22 top the declines and rallies have been three – wave structures and appears be an Elliott wave – Horizontal Triangle which may have completed at the low made on 02/17/22.
The SPX 30 – minute chart courtesy of Trading View illustrates the wave structure.
There are Fibonacci relationships among the sub waves.
Minor wave “C” is 230.47 points, Minor wave “A” is 596.00. A ratio of 230.47/596.00 = .386 close to the Fibonacci ratio of .382.
Minor wave “E” is 115.74, Minor wave, “C” is 230.47. A ratio of .502 close to the Fibonacci ratio of .50.
Minor wave “B” retraced .625 of Minor wave “A,” close to the Golden Fibonacci ratio of .618.
Minor wave “C” retraced .618 of Minor wave “B”.
Occasionally wave “E” can have a throwover of the trendline that connects the termination points of wave “A” and “C.” This occurred with the supposed Horizontal Triangle from the 01/04/22 peak.
The only factor that prevents this structure from being a textbook Horizontal Triangle is the throwover of the trendline from wave “B” to “D.” This throwover does not invalidate the structure.
If the wave count is correct it presents a low-risk opportunity to take long positions with non-leveraged S&P 500 related Exchange Traded Funds.
The key level is the supposed SPX minor wave “C” bottom at 4364.84 made on 02/14/22.
If on 02/18/22 the SPX opens at 9:30 AM – ET above SPX 4364.84 go long 50% SPX non leveraged funds. Use a move below SPX 4364.84 as a stop loss for half of the position.
The March 2022 S&P 500 – E- Mini contract symbol (ESH2022) can be used as a guide to see if the SPX will open above 4364.84. The corresponding ESH2022 level is 4354.00. If ESH2022 is trading below 4354.00 just before 9:30 AM – ET, Do not take SPX long positions.