SPX: Follow Up of The Triple Zig Zag Elliott Wave Count
Since next Friday I am heading to the beach for at least 4 weeks this is probably my last update until mid August.
As I have discussed in my last update on June 8 on the subject of the long-term Elliott Wave count (From the March 2009 low) I am considering that price is unfolding a Triple Zig Zag.
If this scenario is correct from the October 2013 low price should unfold a Zig Zag (ABZ) with a theoretical 1.618 extension target located at 2066.
We have the same issue I discussed regarding the up leg from the October 2013 low to the January high, which is clearly corrective. Once again the up leg from the February 7 low is also corrective therefore since the last wave (Z) must be impulsive the absence of impulsiveness should result in an Ending Diagonal.
If as it seems probable but it is not confirmed yet, that on July 4 price has concluded with a corrective pattern the advance from the February 7 low a wave (II) pullback should bottom in the range 1900 (Weekly gap fill) - 1883 (March 7 high; last breakout).
Therefore if this scenario is correct in the coming weeks price will undertake a shallow correction.
The significant drop of the NYSE Summation Index, which issued on July 7 a sell signal, has brought its RSI almost at the oversold line strengthening the idea that price should be involved in a "mild" correction.
If I am wrong we know where the line in the sand is located since in order to expect a new bear cycle price has to breach the 10 mma (Monthly close), which today stands at 1866.
Going back to the Elliott Wave pattern of the advance from the February 5 low I have labelled it as a Triple Zig Zag. If it is done price will have to breach the accelerated trend line support from the April 11 low and the 50 d ma which today stands at 1927. If this is the case the potential target box for the assumed wave (II) of the Ending Diagonal scenario should be located in the range 1900 (Gap fill) - 1867 (150 dma).
However given the "soft" 3-wave down leg off the July 3 peak we still need the confirmation of a trend reversal with either a lower high or a lower low