The 08/10/23 blog noted that the S&P 500 (SPX) may have completed an Elliott wave extended Impulse wave at the 08/09/23 bottom. The pattern after the 08/09/23 low was expected to be a developing Elliott wave -Inverse Expanding Flat.
The 5 – minute SPX chart courtesy of Trading View updates the action.
Expanding Flats are corrective patterns of the main trend. They are composed of three – waves. The first wave “a” sub divides into three – waves. The second wave “b” also sub divides into three – waves. Wave “b” terminates marginally beyond the point of origin pf wave “a”. The final wave “c” sub divides into five – waves that terminate marginally beyond the point of origin of wave “b”. When the main trend is down Expanding Flats are referred to as Inverse Expanding Flats.
The 08/10/23 blog mentioned one possible scenario.
“Note the question mark after the presumed Minute wave “b” boxed – label. Its possible Minute wave “b” could still be developing. If so, there could be another marginal new SPX low made early in the 08/11/23 session. If this develops it could be the starting point for a rally to the 4,530 to 4,550 area.”
Early in the 08/11/23 session the SPX made a marginal new low. Fibonacci evidence supports the theory that an Inverse Expanding Flat could be forming.
Typically wave “b” of an Expanding Flat is related to wave “a” by the Fibonacci inverse ratio of 1.236. The length of Minute wave “a” is 66.04. The length Minute wave “b” is 83.39.
83.39/66.04 equals 1.26.
If Minute wave “c” is developing the main upside target zone is 4,530 to 4,550 which could be reached in the next one or two trading days.
Caution, recent SPX rallies have been relatively weak and brief. Its possible the presumed Minute wave “c” could terminate below the Minute wave “a” peak at 4,527.37. If this were to occur the structure could be a rare Inverse Running Flat. This corrective pattern is potentially very bearish.
An alternate upside target zone is 4,510 to 4,525.
Four Dimension Trading 