Monday, 16 August 2010

12:33 BST - SPX Update 60, 15 and 5 min pitchforks and TA

Following on from my weekend post showing the weekly and daily charts of SPX with pitchforks and other, more conventional technical analysis, here are some intra day charts with a look at what those technical analysis tools might be suggesting:

SPX 60 min:

This was last posted on Friday when I interpreted the chart as suggesting that a further low was on the cards. I don't think that's changed. The RSI turned down at the end of the day, still having been unable to get to the 50 line, let alone above it. The MACD histogram  seems to have formed that peak that is lower than the prior one, which is bearish. The stochastic has turned down from the 50 line, again, bearish.

Price continues to oscillate around the lower line of the blue fork, with the 13ma forming a barrier of resistance at the moment.

As shown in my end of day update on Friday, the elliott wave count suggests another low is required to complete a nice looking 5 waves down from 1129.24. This 60 min chart is consistent with that and its probably set up to give  the postive divergence that we'd expect to see on a 5th wave - I mentioned on Friday that the MACD histogram troughs were consistent with a 1st and 3rd wave down in price; if we do get a 5th wave down, its not difficult to see that we might also get a higher trough in the histogram. If so, we might then start to look for higher low bars within that new trough to indicate that we may have seen the end of the 5th wave, as well as monitoring the elliott wav count (the one I showed in Friday's end of day update may or may not be correct).

Here's the 15 min chart:

The blue fork is the same as the blue fork on the 60 min chart above. You can see the pink fork did a pretty good job of delineating the 3rd wave down (if that's what it was), but was then broken to the upside on Friday. 

We formed a new upward green fork and got to the median line of that fork. This was initially bullish, but the fact that price fell straight back down to the lower line of the green fork, without much hesitation, suggested something was amiss. If it was bullish, price should have bounced at the lower line. Instead, it struggled for a while to cling on to the lower line, but when it hit the upper line of the new black fork that was created from the high that hit the median line of the green fork, it just collapsed away, towards the median line of the new downward black fork. That seems rather bearish.

If we're going to see a 5th wave down, we might expect it to get towards the lower line of the black fork - perhaps repeating the type of action we saw within the pink fork, but on a smaller scale.

The standard technical analysis tools on this chart also seem set up for divergence against a potential new price low, expecially the MACD and its histogram.

Here's the 5 min chart:

Except for the red fork, all of these forks are the same as the forks shown on the 15 min chart.

Its just a closer look at the failure of the break above the pink fork that seemed to be guiding price lower on Friday. Once we broke above it, there was bullish potential, but that was negated with the failure of the green fork, as described above.

Since the elliott wave count, and technical indicators, seem to be consistent with a 5th wave low coming up, we'll need to watch all of them and the pitchforks for signs of an end to the decline, assuming that we do get that move lower for the 5th wave down. 

If we start breaking above the black fork instead, then we'll have to monitor the behaviour of price within any new upward fork that may be formed to see if we may have ended the decline without that 5th wave (though as I've mentioned - see Friday's end of day update - we may already have had the 5th wave) of if we may still be chopping around in the 4th wave before the final drop.