May 3, 2022

S&P 500 / Elliott Wave Update 5/02/2022 by Michael Filighera

Monday’s trade was chock full of volatility and very powerful moves in both directions.  The ES blew through support and resistance without pause or reason and that made for more opportunities that I could take advantage of.  Moral of that story — trade small and trade often — trade with a purpose – i.e., have a plan, know why you are entering a trade, what your expectations are for the trade, where you will get out of the trade and where you will “kill” the trade if it goes against you.  Without it would be akin to flying a Cessna into a fog bank without any IFR instruments to guide. You will lose your ability to know direction and most likely crash and burn.  Same thing when trading without a trade plan, without parameters for the trade thus the trade is very likely to “crash and burn.”

The current Elliott count remains the same.  I have updated the labeling to reflect today’s 4056 low as the completion point for sub-minute wave 1.  And yes, that suggests we are putting in yet another wave 2 correction.  Remember in the larger Intermediate degree moves and in particular the third waves – subdividing is all a part of the move itself.  It is what makes 3rd waves the longest and the strongest waves within an impulse move or between waves 1,3, and 5.  Ok, so the parameters for wave 2 reveal that – 1) we are looking for an A-B-C rally, 2) wave A may be complete at the closing high and 3) resistance levels for wave 2 remain at 4150, 4164, 4180, 4209, 4230 with the hourly 200 MA sitting at 4256.

For tomorrow, the overall structure of the small wave 2 in progress may be zigzag with waves A and C being 5 waves and wave B being a 3-wave pattern.  Wave A may be complete or still need an additional high above 4156. Wave B should hold above 4100. Wave C should hold below the hourly 200 at 4256 and cannot break above 4303. Once complete expectations are for the 3rd wave to continue down with again acceleration and power.