Wild Oscillations

Since 04/25/23 the S&P 500 (SPX) has experienced dramatic swings up and down.  On 04/25/23 the SPX had a powerful move down breaking strong support.  Then suddenly on 04/27/23 a huge move up that pushed the SPX to a new post 03/13/23 rally high.  Finally, just after the open of the SPX 05/02/23 session, a brutal two – hour drop pulverized the bulls.  Today 05/03/23 the U.S. – FOMC announced another .25% interest rate increase, and the SPX closed the session marginally below its 05/02/23 bottom.   Does this mean an important SPX top is in place as of the 05/01/23 high?  Probably not, there are clues within the structure of the wild oscillations that suggests the SPX could soon move above the 05/01/23 peak.

The 30 – minute SPX chart courtesy of Trading View illustrates the wild action.

The movements up and down of the SPX since its 04/18/23 top appear to be corrective structures.  Minuette wave (a) is an Elliott wave – Double Zigzag.  Minuette wave (b) is a Single Zigzag.  The drop from the 05/01/23 high could be a completed or developing Single Zigzag.

The most fascinating aspect of the structure is the Minuette wave (b) to Minuette wave (a) relationship.   Minuette wave (b) is 137.57 points.  Minute (a) is 120.13 points.  The inverse ratio is 137.57/120.13 is 1.145.  This is a rare Fibonacci ratio that sometimes occurs in Elliott wave “B” position of Expanding Flats and in the wave “B” position of Running Horizontal Triangles.  Both of these patterns are corrections of the main trend in which the wave “B” makes progress within the main trend. 

An example of an Inverse – Running Horizontal Triangle is in Sub Minuette wave “x” of Minuette wave (a).  This Inverse – Running Horizontal Triangle corrects the downside progress of the first Single Zigzag,  yet Quantum wave “b” make additional downside progress.  Also note that the Inverse Fibonacci ratio of Quantum wave “b” to Quantum wave “a” is 1.3819.

Four Fibonacci ratios are as follows.

.618 – the Golden ratio.

.618 x .618 is .3819, or inverse 1.3819.

.3819 x .618 is .236, or inverse 1.236.

.236 x .618 is .145, or inverse 1.145.

The two most common Fibonacci Inverse ratios of waves “b” to “a” in Expanding Flats or Running Horizontal Triangles are, 1.3819 and 1.236.  The relationship of Minuette wave (b) to Minuette wave (a) is an exact 1.145.  This may seem like an unimportant point  – it’s not.    

When it comes to Elliott wave relationships – size matters, and in this case it’s a powerful clue that implies more upside action.

 Additional short-term bullish evidence is illustrated in the 30 – minute SPX and Nasdaq Composite (IXIC) chart.

The SPX has retraced about 70% of its progress from the 04/26/23 bottom. The IXIC has only retraced about 52% of the progress  made from its 04/25/23 bottom.  Additionally, IXIC has failed to move below its 05/02/23 bottom.

There’s a good chance that the SPX could soon move above it 05/01/23 high.  If so it could end  the rally that began on 10/13/22.