Wednesday, 23 June 2010

21:50 BST - SPX Update

It was pretty much sideways today really - suggesting a corrective wave of some sort. Whether it was a 4th wave, a 2nd wave or a (B) wave remains to be seen.

Here are the 5 counts - all still in play (see the 60 min counts for context):

Option 1 - wave (ii) topped at 1131.23

SPX 6 min chart:

Still showing the [1],[2],(1),(2) count for this one. Today's action is counted as wave (4) of [3], with wave (5) of [3] starting. If we take out today's high at 1099.64, then either wave (4) of [3] is continuing or a more bullish count is in play.

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

 SPX 5 min chart:

This count makes the current decline wave ii of (c)  which appears to be forming a double zig zag. You can see the retracement levels for wave ii on the chart. As I showed in the 1 min chart posted earlier, its possible that we completed a single zig zag at today's low, in which case, we should have started wave iii up. Unless we saw a series of 1,2s off today's low, it may be more likely that we need a (C) wave to complete the double zig zag.

Also remember that its possible that 1131.23 was the end of wave (c) of [ii], in which case, the counts in Option 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 shown 5 waves down complete on this chart, but counts shown for Options 1 or 4 would go equally as well. It calls for more upside in a wave ii correction. The retracement levels for wave ii are shown on the chart. If we take out today's low without a deeper retracement, its still possible that we had a wave ii, but probably unlikely and I'd focus more on the count shown for Options 1 or 4.

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

SPX 15 min chart:

This is a slight variation on the themes in Options 1 and 3 above. On this count, the next leg lower would complete wave [1] down. 

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

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

SPX - 8 min chart:

This makes the current decline wave iv. The retracement levels are shown on the chart. The wave iv count is invalidated if  the end of wave iv is below 1077.74 (the wave i high). It got quite close today. The depth of the retracement may suggest its not a 4th wave correction, but I think I'll leave it on the table until its ruled out by breaching the level mentioned above.

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.