On the counts that imply the rally from the 1 July low is a corrective one (Options 1, 2, 4 and 5) I showed completed double/single zig zags at yesterday's high in last night's update.
On the count that places us in a 5 wave move off the 1 July low (Option 3), which would be part of a larger correction up, I labelled yesterday's high as wave (iii) of that advance, so we would now be in wave (iv).
On the count that places us in a 5 wave move off the 1 July low (Option 3), which would be part of a larger correction up, I labelled yesterday's high as wave (iii) of that advance, so we would now be in wave (iv).
The Options 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.
Today's action doesn't yet tell us whether the rally from 1 July has completed a corrective move or whether its only all (or maybe, part) of a larger correction up.
Here's how things stand after today:
Option 1 - Wave (ii) of [iii] topped at 1131.23
15 min chart:
Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies a wave iii of (iii) decline to follow.
Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies a wave iii of (iii) decline to follow.
The 1099.46 high is the invalidation point for the completion of wave ii on the double zig zag as labelled.
I've labelled a (1)-(2)-1-2 to account for today's action. The invalidation points are today's high, which would eliminate the 1-2, and then yesterday's high, which would mean that we didn't top at 1099.46.
I've labelled a (1)-(2)-1-2 to account for today's action. The invalidation points are today's high, which would eliminate the 1-2, and then yesterday's high, which would mean that we didn't top at 1099.46.
Option 2 - Wave [ii] topped at 1131.23
15 min chart:
For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down. The double zig zag up from 1010.91 would be wave (ii) of [iii], so, assuming its complete, we would be in wave (iii) of [iii] down.
On this chart I've labelled today's high at 1099.08 as a truncated 5th wave to complete the double zig zag. This is because the retracement of the decline from yesterday's high was very deep (94.1%) so could easily have been a truncation, even though a 94.1% retracement is a perfectly valid 2nd wave (.941 is the square root of .886, which is the square root of .786, which is the square root of .618, so its not just a random number).
However, at the moment, my favoured count is the one shown on the chart of Option 1 above.
The count shown on this chart is invalidated above 1099.08.
For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down. The double zig zag up from 1010.91 would be wave (ii) of [iii], so, assuming its complete, we would be in wave (iii) of [iii] down.
On this chart I've labelled today's high at 1099.08 as a truncated 5th wave to complete the double zig zag. This is because the retracement of the decline from yesterday's high was very deep (94.1%) so could easily have been a truncation, even though a 94.1% retracement is a perfectly valid 2nd wave (.941 is the square root of .886, which is the square root of .786, which is the square root of .618, so its not just a random number).
However, at the moment, my favoured count is the one shown on the chart of Option 1 above.
The count shown on this chart is invalidated above 1099.08.
Option 3 - Wave [iv] of an ending diagonal completed at 1131.23
15 min chart:
For this Option, 5 waves down from 1131.23 to 1010.91 could be wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.
It places us now in minor wave 2 up. I've labelled the start of 5 waves up from the 1010.91 low, on the assumption that we will get a zig zag type move up for wave 2, since we would be retracing the whole decline from 1219.80, not just the drop from 1131.23.
I'm showing us having completed wave (iii) of what I'm assuming at the moment will be a 5 wave move for wave [a] of minor 2. This would mean the next pullback will be wave (iv) of [a]. This count would be invalidated if that assumed wave (iv) were to fall below 1028.74, the wave (i) high.
I've labelled today's action as wave w of an anticpated combination. It looks like it could be a flat for wave w. Wave y could be a flat, zig zag or triangle - we'll have to wait and see.
The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that the retracement back up was wave (b). Assuming its complete, we'd now be in wave (c) down and the count shown on the chart of Option 1 (or 2) would likely be in effect.
Remember, if there is further downside to come, we must stay above 999.83 for the leading diagonal count to remain valid.
It places us now in minor wave 2 up. I've labelled the start of 5 waves up from the 1010.91 low, on the assumption that we will get a zig zag type move up for wave 2, since we would be retracing the whole decline from 1219.80, not just the drop from 1131.23.
I'm showing us having completed wave (iii) of what I'm assuming at the moment will be a 5 wave move for wave [a] of minor 2. This would mean the next pullback will be wave (iv) of [a]. This count would be invalidated if that assumed wave (iv) were to fall below 1028.74, the wave (i) high.
I've labelled today's action as wave w of an anticpated combination. It looks like it could be a flat for wave w. Wave y could be a flat, zig zag or triangle - we'll have to wait and see.
The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that the retracement back up was wave (b). Assuming its complete, we'd now be in wave (c) down and the count shown on the chart of Option 1 (or 2) would likely be in effect.
Remember, if there is further downside to come, we must stay above 999.83 for the leading diagonal count to remain valid.
Option 4 - Wave [b] of minor Y within intermediate (X) topped at 1131.23
15 min chart:
For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].
For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].
However, as mentioned previously, counting a complete 5 waves down to 1010.91 does bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page. That would put us now in a minor wave A rally and eventually take us to new highs. If wave (X) did end at 1010.91, then the impulse wave I have labelled on the chart of Option 3 would apply here.
For the moment, I've assumed we are starting wave (iii) of [c] down with a (1)-(2)-1-2 from yesterday's high. Watch the 1099.08 and 1099.46 levels for invalidation.
Option 5 - Minor wave X within intermediate wave (X) topped at 1131.23. Now in minor Y down
15 min chart:
On this Option 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.
I've labelled today's action as the beginning of wace [c] - the same invalidation points stated for the other options which sport this count apply here.
For completeness, here's the chart I was posting today showing yesterday's high and the action which followed it today:
SPX 1 min - complete double zig zag:
I've labelled it with the (1)-(2)-1-2 count mentioned above. I had labelled today's low as iii of 1, but with the rally from there reaching 61.8% of the decline, it looks best as a complete wave 1 followed by wave 2. As noted, it could just be a (1)-(2), if we had a truncated 5th wave to end the zig zag.
One thing that needs to be borne in mind is that if we are in what would be a 3rd (or [c]) wave decline of some degree on all the options except Option 3, we need to see some really decisive downward action. Until then, I think that there remains a risk that the corrective rally from 1 July is not over and has a little more to go or that we are in the larger correction anticipated by the labelling on the chart of Option 3, or that we are now in a much larger rally which will eventually take us to new highs (see the comments in relation to Option 4).
Today's downward action was a start, but it needs to get alot more decisive than that before we can really start to believe that a 3rd wave down has started. So, I think caution is still required on the short side for the time being.
On this Option 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.
I've labelled today's action as the beginning of wace [c] - the same invalidation points stated for the other options which sport this count apply here.
For completeness, here's the chart I was posting today showing yesterday's high and the action which followed it today:
SPX 1 min - complete double zig zag:
I've labelled it with the (1)-(2)-1-2 count mentioned above. I had labelled today's low as iii of 1, but with the rally from there reaching 61.8% of the decline, it looks best as a complete wave 1 followed by wave 2. As noted, it could just be a (1)-(2), if we had a truncated 5th wave to end the zig zag.
One thing that needs to be borne in mind is that if we are in what would be a 3rd (or [c]) wave decline of some degree on all the options except Option 3, we need to see some really decisive downward action. Until then, I think that there remains a risk that the corrective rally from 1 July is not over and has a little more to go or that we are in the larger correction anticipated by the labelling on the chart of Option 3, or that we are now in a much larger rally which will eventually take us to new highs (see the comments in relation to Option 4).
Today's downward action was a start, but it needs to get alot more decisive than that before we can really start to believe that a 3rd wave down has started. So, I think caution is still required on the short side for the time being.
