Is 6060 the S&P 500’s Next Upside Target?!
Ending Diagonals (EDs) are tricky because all their waves (i–ii–iii–iv–v) comprise three waves: 3-3-3-3-3 = abc–abc–abc–abc–abc. Besides, W-iii typically targets the 123.60% extension of W-i, measured from W-ii. The W-iv then tends to correct back to the 61.80% extension, after which the last W-v targets the 161.80% extension. In this case, we are looking at W-iii to reach at least SPX6060, W-iv should bottom around SPX5725, and W-v can reach at least SPX6260.
Thus, the red W-iii is still underway and subdividing into the green Waves a, b, and c, with the W-c now underway. This can reach the typical c=a extension at SPX6175ish. Thus, based on the standard EDs road map, which the market can deviate from, we expect the red W-iii to reach SPX6060-6175, where the red W-iv can materialize.
The Ending Diagonal Could Wrap Up Sooner
Our alternative EW count is shown in Figure 2 below. It postulates that the October 31 low was already the red W-iv, but it would make for an unorthodox short W-iii. Namely, W-iii would be shorter than W-i, which is allowed only if W-v will be shorter than W-iii. Thus, it would be very uncommon. Besides, the red W-iv low did not overlap with the red W-i high; see the black horizontal line. Also, this is not necessarily disallowed as a 4th wave does not have to overlap with a 1st wave in an ED, but it would also be very uncommon. Hence, why this is our low-odds alternative