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.