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

The major US stock market incices continue to appear to be carving out an expanded or running flat for wave 2 black. The wave B (blue) was quite deep, and reached slightly beyond 1.618 times the length of wave “A” blue in the SPX, and even deeper in the DJIA, but not beyond the theoretical maximum of 2 times A. Also, and very importantly, the move down from May 29 through June 4 was a 3-wave abc zigzag, and not a 5-wave impulse because it has now overlapped what would have been labeled the extreme of wave 1 of an downward impulse at 1298.90. It is therefore highly likely that it was a wave “B”. So, I’m continuing to expect the SPX to rebound to the extreme of wave 2 within the preceding extended 5th wave at 1345.

In my live weekly broadcast, despite wave “B” of the flat reaching beyond 1.382 times “A”, which is the most typical relationship, I stated that there were enough mixed signals coming from a number of items that wave 2 black could still be underway. One is that the terminal thrust from a triangle in bonds was very near completion, and another was that the dollar appeared to be starting into a larger correction, and another was that the Bank of Japan was actively intervening in the Yen in relatively small nudges, and the bottom of the correction since mid-March was likely “in” for the USD/JPY pair.

These forces appear to have provided an early tell, and now, by the time 5 waves up is done from the June 4 SPX low (or a large ABC if wave 2 black is a WXY), the bullish talk will be running rampant just in time for a major turn to the downside for wave 3 black. As soon as wave 2 black is finished, a target for wave 3 black will be calculable, with the most likely target at where wave 3 black will equal 1.618 times wave 1 black. For instance, if the SPX moves now to 1345 and turns hard, the most likely downside target for the end of wave 3 black will be 1153.