Friday, 6 August 2010

12:59 BST SPX Update - triple zig zag count

I was about to delete my chart of a triple zig zag up from the 1 July low, but when I looked at it again, I thought it actually looks OK once more, with a bit of adjustment to the third zig zag labels.  Here it is capturing the end of the first zig zag (wave (w)) and the second and third zig zags:

SPX 1 min - triple zig zag in progress:

It does allow for more upside in wave [C] of the third zig zag. If wave [C] is going to equal wave [A], it'll get to 1158. If its .618 x wave [A], that's at about 1143.

However, if you look back at this count, which I last showed on the chart of Option 2 on 3 August, the [A] waves are alot shorter than the [C] waves - within w [A] was .236 x [C]; within y, [A] was .50 x [C]. It may be that if we've had a decent sized [A] wave on this third zig zag, that wave [C] ends up being much shorter than wave [A] and that would fit with the bearish signs showing up in various time frames.

Also, wave y was about .707 x wave w. If wave z is .707 x wave y, that targets about 1133/1134 and at that level, wave [C] of z would be about .382 x wave [A] of z.

Obviously, none of this means that the market will turn at any of these lower points rather than the higher ones identified above, but they just provide levels to watch for potential reversals if the market does continue the rally from 1 July.