Elliott Wave - S&P500 Cash Index - 12 Aug 10

Per the discussion yesterday a Diagonal pattern is no longer possible leaving the Zigzag as the only choice. Using Neely's labeling and degree conventions for structure, this complete 'Level 1' Zigzag is likely to be the 'Center 3' (:C3) of a larger pattern, either a Flat or Contracting Triangle.

Elliott Wave - S&P500 Cash Index - 11 Aug 10

     Once three waves of a pattern are complete the question is whether it will continue on and become five waves. The first observation to make when analyzing this point is to note whether the retrace after wave 3 or c goes below the wave 1 or a high. If it does (like in our current example) then the only five wave pattern possible is a Diagonal.
     Key to the Diagonal pattern are the trend lines drawn across waves 1/3 and 2/4 (see posted chart). They MUST converge. At this point they do; but just barely. For now let’s leave it at that.

Elliott Wave - S&P500 Cash Index - 10 Aug 10

Elliott Wave - S&P500 Cash Index - 9 Aug 10

Elliott Wave - S&P500 Cash Index - 6 Aug 10