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

With today’s new high above the the February 29 high, a slightly revised wave count is in order. Apparently, the gradual melt-up from January 5 though February 29 must now be labeled wave 3 (pink), despite the fact that it never exhibited typical wave 3 behavior. Wave 3’s should really feature a strong, almost vertical middle section that is accompanied by strong volume. Therefore, the S&P’s melt-up behavior continues to support my main expectation that the upward movement since the September 22 low is a wave B.

Also supporting the idea that we continue to be quite near a major trend change is the extremely low level of the VIX, which just took out last year’s low today, and therefore found its lowest point since June 2007. It is interesting to note that as soon as the new low in the VIX occurred (immediately at the NY open), it has been climbing rather aggressively. Yesterday, the VIX (using a daily chart) closed slightly below the lower Bollinger Band (set at 21 days and 2 standard deviations), so the next time the VIX closes back above the lower BBand, for many VIX traders, that will constitute a sell signal (on the S&P-500 Index).

Shown on the chart is the most likely zone for wave 5 (pink) to end, which is from 1418.45 (where wave C blue will equal twice the length of wave A blue), to 1422.96, where wave B burgundy will be 1.236 times the length wave A burgundy was. In the middle of that zone is another target, 1422.26, which is where wave 5 pink will equal the distance wave 1 pink traveled. Despite the cluster of targets near 1420, wave 5 pink could end at any time or length, as long as it carves out a 5-wave impulse (projected by the green digits on the chart).

Sid
http://elliottwavepre.wpengine.com