Elliott Wave Guidelines For Fourth Waves

The market is in a fourth wave here inside what should still be circle iii of 1 off the (B) wave top in July, but fourth waves are notoriously complex even at a small degree.

Elliott Wave gives us a couple of rules and a lot of guidelines for fourth waves that can certainly give us a lot of clues to where it should hold and even what shape it should take.

Let's start w/ the SPX:  We know the 4335-40 region is ideal for (iv) based both on Fibonacci Pinball inside the circle iii and the ideal 38.2% retrace of (iii). IDEALLY this is just a of more of a (iv).

However, it is technically enough for ALL of the small (iv) especially inside of a larger circle iii. Based on the Guidelin of Alternation:  We have a wide & deep wxy Flat for (ii), so a quick shallow ZigZag completing a yellow (iv) is not unreasonable.

Zooming in on the ES futures... The higher high this morning could count as a fifth extension of the C-wave we were tracking yesterday. That can complete all of (iv) there (yellow) a smidge closer to the 38.2% or still be just a.

If a b-wave we should see a Corrective micro ABC holding the 4300 region for both Fib support for b, and the 200DMA.

Now let's check in with the S&P's TechSavy bro NQ: If a (iv) ideally this was all of it. But NQ stopped short of the ideal 100% Fib of circle iii where we want our (iii) of iii to target based on FibPinball. So this can be just an alt iv of (iii) (yellow).

So rather than holding a b-wave of a wider/higher (iv) like ES might try, this could drop a little quicker and sharper in an alt yellow v of (iii) lower than the 9/27 low and then bounce just a sharply in the #Akshual (iv).

In fact that is ideally how XLK should count here... Just the iv of (iii), Trying for a quick nominally lower low for v of (iii) and then bounce right back up to this region in the real (iv) of circle iii ("My-Newt 3").

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Zac Mannes is a senior analyst at ElliottWaveTrader.net and co-host of the site's Stock Waves service, which provides wave alerts and trade set-ups on individual stocks.