Today 04/11/22 the S&P 500 (SPX) broke below important support at 4450 and opened the door for three possible Elliott wave counts. Two of the counts assume a new bear market is under development. One wave count assumes the SPX drop from 03/29/22 is a correction within an ongoing bull market.
The first 30 minute – SPX chart courtesy of Trading View shows the first possible bearish Elliott wave count.
This count has an Elliott wave – Leading Diagonal Triangle under development. This structure only appears in the first wave of motive patterns and in the wave “A” position of corrective patterns.
If this count is correct it could be complete as of the low on 04/11/22 or early on 04/12/22. After completion it would be Minute wave “i” of a larger developing five- waves down. The presumed Minute wave “ii” rally could last from one to three trading days and not exceed 03/29/22 high.
The second 30 – minute SPX chart assumes a powerful drop is developing.
This Elliott wave count is referred to as a series of “one’s” and “two’s” down and is the prelude to a strong and sharp decline. In a few days the SPX could break below the 03/14/22 bottom.
The third 30 – minute SPX chart assumes the drop from the 03/29/22 peak is a correction within an ongoing bull market.
This illustrates an Elliott wave – Double Zigzag corrective pattern. If so the first Zigzag down is complete with the second Zigzag under development. This pattern could bottom in the area near a Fibonacci .618 retracement of the 03/14/22 to 03/29/22 rally.
The daily SPX Bullish Percent Index ($BPSPX) courtesy of StockCharts.com provides evidence of the SPX internal momentum.
Bullish Percent Index is a breadth indicator that shows the percentage of stocks on Point & Figure buy signals.
On 04/11/22 with the SPX breaking below important support, $BPSPX failed to make a new low. This is a bullish divergence and implies at least a short-term rally could soon be underway.
If the SPX continues to decline, $BPSPX could either confirm or not confirm the action.