Monday, 21 June 2010

22:07 BST - SPX Update

Quite the reversal today, but there's still no certainty that we have seen an important top yet.

From today's high, we have three waves down. It could be a 1-2-3 or it could be an A-B-C.

Referring back to the various counts I am watching (see the 60 min charts here), the most bearish ones are Options 1, 3 and 4. Here are the short term charts for each: 

Option 1 has us completing wave (ii) of [iii] down. We've retraced over 61.8% of wave (i), so its feasible that today's high was the end of wave (ii) and the decline is the start of wave (iii) of [iii] down:

Option 1 - 6 min chart:

Option  3,  has us completing wave [iv] of a leading diagonal. Here, there is a reasonable count of a double zig zag from the 8 June low. It could go higher, but not too much since the lines of the diagonal have to be converging:

Option 3 - 5 min chart:

Option 4,  has us completing wave [b] of a second zig zag minor Y wave. This too, could go higher, but its limit will be 1173.57. As it is, it counts nicely as a zig zag up from 8 June to complete (y) of [b]:

Option 4 - 15 min chart:

Option 2 has us in wave (c) of [ii] up. It could be immediately bearish like the three counts above, or, its possible that the rally from 8 June has only been wave i of (c) (not the whole of (c)). If its only i of (c), then today's three wave decline from the high may only be all or part of a wave ii correction before we rally higher. Even if we make 5 waves down tomorrow, until we take out the 8 June low, this is the upside risk on this count:

 Option 2 - 5 min chart:

Option 5 is the most bullish count. On this count, today's high would be the end of wave iii of (i) of [iii] up within minor A. The decline from today's high could well be all (or part) of wave iv - its retraced back down to the lower line of the elliott channel and its between a 23.6% and 38.2% retracement of wave iii:

Option 5 - 8 min chart:

So, despite today's bearish looking reversal, there remain bullish counts on the table. The low at 1042.17 is the key level for those bullish counts, so until we take out that level, they remain valid. Even on the bearish counts (Options 1, 3 and 4), we could still be in a subdividing 5th wave up, as I showed in this chart posted earlier today, and that possibility stands until we take out 1105.87.