SPI200, a necessary ZigZag

Hi Traders

The SPI200 now at 4,985 took a big hit in the last few weeks. Although this happens all the time around the end of May, many ask whether this is the end of the uptrend.

THE REAL PICTURE

Check the weekly chart below. After the big slump occurred in Nov 07-Mar 09, the SPI200 performed major-wave-1 up and major-wave-2 downward (in bold grey, font 15). It's now trying to unfold major-wave-3 to the area 5,469-5,572.

But hold your horses.

weekly chart - click to enlarge

To be able to develop major-wave-3 the index needs a system of 5 waves, 3 of which are already on the paper (1-2-3 in blue). 

Now, every Elliott guy knows that the next wave (wave 4) could be a boring long term ZigZag (or 5-3-5) between the previous major top and the area at 4,569-4,459. 

This Zig-Zag will be followed by the resume of the last wave up (wave 5).

All the blue horizontal lines in the weekly chart above are possible targets for wave 4, a zig-zag made of 3 to 5 waves. 

TIMING

Wave 4 in the weekly chart above might end around September 13-16 followed by the start of the final uptrend (wave 5).


SHORT TERM SITUATION

In the daily chart below, this very first downtrend must be completed in 5 waves. We just started the small retracement-wave-4 to 5,004-5,009 an maybe higher (5,033-5,036).

Then wave 5 will resume downward to 4,888 and maybe 4,849.

Note: the target area marked by the blue horizontal lines. This is the target of the first impulse wave downward.



daily chart - click to enlarge

TARGETS

short pullback (wave 4 in the 4-hour chart) to

likely: area 5,004-5,009
possible: 5,033-5,036

then

short downtrend (wave 5 in the 4-hour chart) to 

likely: 4,907-4903
possible: 4,888-4,849

Target area even clearer (the targets) in the 4-hour chart below


4-hour chart - click to enlarge