The S&P 500 (SPX) could be at a crossroads. This blog illustrates two potential Elliott wave count paths.
First an illustration of the possible truncated fifth wave that was noted in the prior blog.
The 15 – minute SPX chart courtesy of Trading view shows the Elliott wave subdivisions of the decline from 09/29/23 to 10/04/23.
Truncation occurs within motive waves when the fifth wave fails to exceed the termination point of the third wave. Truncated waves can not be predicted and are usually difficult to recognize as they develop.
On the 10/03/23 the SPX appears to have made what is referred to as the “actual bottom” on 10/03/23 at 4,216.45. The end of the five – wave structure from 09/29/23 happened on 10/04/23 at 4,220.48 – called the “orthodox bottom”.
The SPX – 3 – minute chart shows the presumed truncated Sub Minute wave “v”.
If this wave count is correct it implies at least a multi – day rally.
The SPX 30 – minute chart shows the prime – Elliott wave count.
If this count is correct the SPX is in the second wave “two” rally since the 07/27/23 peak. This would be a larger version of a series of “one’s” and “two’s” noted in the 09/13/23 blog “S&P 500 – Short – Term Elliott Wave Count – 09/12/23”.
There’s strong resistance at the Fibonacci .382 retracement of the 07/27/23 to 10/03/23 decline. This level is near the heaviest area of selling that occurred on 09/20/23 to 09/21/23.
The next 30 – minute SPX chart illustrates a lower probability Elliott wave count.
Stock seasonal patterns are bearish from May to October. Sometimes significant bottoms happen in early October. It’s possible an Elliott wave – Zigzag correction has completed. If so the SPX could rally to a new 2023 high sometime in November or December.
If the SPX can go above the “gap” created on 09/21/23, it could increase the chance of a move beyond the July 2023 top.
There are other potential Elliott wave counts. The U.S. September payroll report is due at 8:30 AM – EDT on 10/06/23. If the report triggers an SPX move below the 10/03/23 bottom it opens the door for other Elliott wave interpretations.
If the 10/03/23 bottom holds, the rally could continue into the early part of next week.
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