Monday, 28 June 2010

21:45 BST - SPX Update

Another rather sideways day today meaning there are still a myriad of counts on the table, both bullish and bearish.

Here are the 5 counts (see the 60 min counts for context). Remember that the counts shown in Options 1, 3 and 4 are interchangeable. There remain so many ways to count the decline from 1131.23, so I've just used each of those options to illustrate different bearish counts:

Option 1 - wave (ii) topped at 1131.23

SPX 6 min chart:

For this count, we either had a brief wave [4] rally which ended at 1085.95, followed by a (1), (2) representing part of wave [5] down, with (2) likely topping at today's high of 1082.60 and we're now starting wave (3) of [5] down, or wave [4] has formed a triangle which topped at 1082.60 and we are now in the early stages of wave [5] down. On either of those counts, the 1082.60 high is the invalidation point and may mean that wave [4] is still in progress.

Option 2 - wave i of (c) of [ii] complete at 1131.23:

SPX 5 min chart:

This count shows a completed wave ii correction and the start of wave iii up within wave (c) of [ii]. Wave ii retraced 70.7% of wave i. The invalidation point for this count, as labelled, is the wave ii low at 1067.89.

The alternative is that we are forming a double zig zag from 1131.23 and we had a triangle (B) wave that completed at 1082.60. 

If the triangle completed at 1082.60, then we may have seen a small 1,2 down (wave 1 being a leading diagonal, perhaps). It has to stay below 1082.60 for this count to remain valid, otherwise, either wave (B) is still on going or the more bullish count, that we have started wave iii, is in play.

Obviously, any further decline can't take out the start of wave i at 1042.17.

Also remember that its possible that 1131.23 was the end of wave (c) of [ii], in which case, the counts in Options 1, 3 or 4 may be applicable and we'd be in wave [iii] down.

Option 3 - wave [iv] of a leading diagonal completed at 1131.23:

SPX 5 min chart:

I've retained the nested ones and twos on this chart. I've changed the count slightly to show wave 2 completing at today's high with a truncated  C wave within y and we've possibly started wave 3 down. If we take out the wave 2 high at 1082.60, then this count as labelled is invalidated, but it would still be possible that wave 2 is in progress, as long as it stays below the wave (2) high at 1099.64.

Option 4 - wave [b] of minor Y within a wave [X] completed at 1131.23:

SPX 15 min chart:

This shows a completed wave [1] at 1074.63, with an expanded flat wave [2] in progress. I've changed the count slightly to show wave (B) of [2] as a triangle - the triangle may still be in progress, or may have completed at today's close (I've labelled it complete there). If that's right, we'll need to rally pretty much from the start tomorrow in order to avoid invalidating the triangle. If we're in wave E of the triangle, it can't go below the wave C low at 1071.45.

We still need to take out the (x) wave low at 1052.25 before its confirmed that we're in wave [c] of Y. 

For Options 1, 3 and 4, there is also the extending 5th wave count. I've moved the wave 2 high to 1082.60, but even if that gets taken out, it could still be forming  wave 2 provided it stays below the wave (2) high at 1085.95. If it takes that out, it may be we are still in wave (2), subject to the high of 1099.64  remaining intact:

Option 5 - we completed wave (i) of [iii] at 1131.23:

SPX - 8 min chart:

The picture here is the same as shown on the chart for Option 2, but I've only shown the bullish count which puts us at the start of wave (iii) up. If we take out the wave (ii) low, then it'll probably mean that the double zig zag count shown on the chart for Option 2 is playing out.

As before, if it takes out the low at 1042.17 (the end of wave [ii]) then this particular count will go but it may just mean we ended  a minor X wave at 1131.23 and that the drop from 1219.80 is forming a double zig zag rather than the single zig zag that completed at 1040.78. It would mean more downside near term, but longer term, would be bullish.