Elliott Wave Analysis of the S&P-500 (SPX) by Sid from ElliottWavePredictions.com

Elliott Wave Analysis of the S&P-500 (SPX) by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.

If my interpretation of the movment down from May 1 as a 5-wave impulse is correct, the implication is that downward movement in US equities has only just begun. My main (and long-held) wave count has been expecting a burgundy (Primary degree) Wave C to the downside, and C-waves are “fives”, so the impulse starting May 1 is most likely wave 1 black of a much larger 5-wave impulse.

Even if you refuse to believe any such thing, since the move down from May 1 is very likely a 5-wave impulse, even if it is “just a correction”, the only corrective structure that starts with an impulse is a zigzag, so it would only be just the wave A start of an ABC bearish zigzag correction.

Either way, the SPX is nearing a fibonacci target of 1321.25, where wave 5 blue would be equal to the net traveled by waves 1 through 3 blue, times .618. I’m therefore expecting a corrective 3-wave structure for wave 2 black to start quite soon, likely retracing .382 to .618 of wave 1 black. Wave 2’s are usually deep zigzags, so 1379 is my primary target for the end of the wave 2 black correction. Wave 3 black (or wave C black for you perma-bulls) should follow to the downside, most likely reaching at least 1.618 times the length wave 1 black was.  We’ll be able to set that target, and others after waves 1 and 2 black complete.

For a longer term look at my main SPX count, see my April 17 post, and before that, my September 20, 2011 post.