Tuesday, 20 July 2010

10:19 BST - SPX Update - Variations of the Bearish counts from 13 July high

Here's a quick look at some ways to count the decline we have seen since the 1099.46 high on 13 July. These apply to the bearish Options, 1, 2, 4 and 5 (meaning, the counts which should be bearish in at least the short term - see the 60 min counts page). I've used the chart of Option 2 as the basis for the degrees of the labelling. All assume a truncated high on 14 July at 1098.66.

The count I've been posting has us in a [1]-[2]-(1)-(2)-1-2 down, which anticipates a 3rd of a 3rd at various degrees will occur very shortly and probably without much more upside beforehand, as mentioned in last night's update:

SPX 1 min - [1]-[2]-(1)-(2)-1-2:

This count is invalidated as labelled if 1079.64 is taken out by wave 2.

The next chart contains two possible counts. 

The first is a [1]-[2]-(1)-(2) - still bearish but there could be more upside in wave (2) before we drop. For example, if wave (2) is actually an A-B-C correction, the move from yesterday's low, where I currently have wave X (which would be wave B) would have to form 5 waves. So another up leg from 1068.4, which I would consider the 4th wave, would be needed. The 4th wave couldn't end below 1067.41, which I would consider the 1st wave (see the third chart posted below).

The second count on this chart shows a [1]-[2]-[3]-[4] from the 1099.08 high. If this is correct, wave [4] has retraced nearly 38.2% of wave [3], so could be about done. So, we would expect a decline in wave [5]. This version of the count would be invalidated if wave [4] ends above 1087.68.

SPX 1 min - [1]-[2]-(1)-(2) or [1]-[2]-[3]-[4]:

The last chart shows a complete 5 waves down from 1099.08 as at Friday's low:

SPX 1 min - 5 waves down to 16 July:

This count would assume more upside in wave ii before we start wave iii down. There is an area of price congestion between the 38.2% and 50% retracement levels, but obviously, wave ii would have the potential to go higher. If we take out the wave (1) of [C] high at 1067.41 before making a new high in wave [C] of ii, the count, as labelled, will be invalidated.