Friday, 2 July 2010

21:32 BST - SPX Update

No resolution yet to the question whether we're in a deep 2nd wave retracement of the decline from 1131.23 or a shallower 2nd wave retracement of the decline from 1082.60 or a 4th wave retracement or something more bullish that will take us back above 1131.23.

Remember, the Options listed below are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page. This is updated at least weekly.

I have a shorter term chart for each of those Options (which are updated as the price action develops) and I have put on each a different way to count the more recent moves, currently from the high of 1131.23. Each of these counts could apply to any one of the Options, though what they mean may differ depending on which Option you are looking at.

So it might seem confusing to have so many Options and counts, but its actually quite straightforward.

Here's how things stand after today:

Option 1 - Wave (ii) of [iii] topped at 1131.23

7 min chart:

For this count I'm assuming we're in the on-going single zig zag count that I posted earlier, since its a wave ii retracement, so ought to retrace more than the rally from 1010.91 has done to date.  Of course, a single zig zag could become a double zig zag and also note the possibility labelled on the chart, that we are only in the early stages of wave (A) of an upward correction.

This count is invalidated below 1010.91.

Option 2 - Wave [ii] topped at 1131.23

7 min chart:

For this count I'm showing the completed double zig zag I've been posting about today. It will be invalidated above 1032.95 and the on-going single zig zag will then be the most likely count. If that happens, the next invalidation point ia 1074.63 - wave [4] can't end above that.

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

7 min chart:

Again, I'm using the completed double zig zag count here. The comments made in respect of the count on the chart of Option 2 apply here, with the same invalidation points.

The bullish alternative, that we bottomed in wave [v] of a leading diagonal down from 1219.80 at yesterday's 1010.91 low remains. It will only be invalidated if we drop below 999.83.

Option 4 - Wave [b] of minor Y within intermediate [X] topped at 1131.23

15 min chart:

For this count I'm going with the on-going single zig zag. since, as a wave ii retracement, it ought to retrace more than it has done to date. You can see the retracement levels on the chart. Perhaps a target of 1047 at the 50% retracement level would be a reasonable target for a wave ii prior to a 3rd of a 3rd decline.

The retracement can't exceed 1082.60 if this count is correct.

Option 5 - Minor wave X within intermediate wave [X] topped at 1131.23. Now in minor Y down

8 min chart:

For this count I'm going with the completed double zig zag. If it takes out the high at 1032.95, then I'll focus on the on-going single zig zag count, but then it will need to stay below 1085.83, the wave i low, to avoid invalidating the count. 

So, those are the levels to watch once again. Next week should help  to determine whether we're in a 4th wave or a 2nd  wave (and if a 2nd wave, which decline we are retracing)  or something more bullish. Well,  I would hope so anyway!

Have a good weekend and to any American readers, Happy 4th of July!