Friday, 25 June 2010

21:56 BST - SPX Update

We had a bit of a rally today. Whether or not its over remains to be seen. There still remain a number of possible counts, 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, I'm looking at an expanded flat type of correction for wave [4] of i down. It may well have completed at today's high with a zig zag for (W), a zig zag for (X) and an expanded flat for (Y) ((Y) may have had a truncated 5th wave).  However, the 38.2% retracement level at about 1093 might still be a target. 

I've shown the alternative I posted earlier, with wave [4] topping at 1085.95 and the subsequent decline and rally being waves (1) and (2) of wave [5]. This would be invalidated if we move above 1085.95.

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. Although it can be counted as complete at today's low, as labelled, it could still be an on going wave ii correction even if it takes out today's low. That would mean a re-labelling of the decline to a double zig zag as shown on the chart - today would have completed (or nearly completed) wave (B) of the second zig zag. 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 changed this count to the nested ones and twos that I previously showed on the chart for Option 4. Wave 2 may have completed at today's high with a zig zag for waves w and x and an expanded flat for wave y. If we take out the wave (2) high at 1099.64, then this count is invalidated. It might be that we then look to just a [1],[2],(1),(2), with (2) being an expanded flat type of correction.


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. Today's rally would have to be counted as 1 of (C) and the decline into the end of the day as all or part of wave 2 of (C). The target for the end of wave (C) would be between 1095 and 1109.

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 which would have today's high as wave 2 of a (1),(2),1,2 within wave [5]:

Taking out 1085.95 would mean it would have to be a (1),(2) of [5]. Taking out 1099.64 would invalidate that.

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.

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.

Have a great weekend!