Tuesday, 24 August 2010

18:37 BST - SPX Update: A look at the bullish counts still in play

Just a quick post to show that the three larger bullish counts I'm following which are summarised on the 60 min counts page all remain intact even after today's initial sell-off. Here they are updated:

SPX 60 min - single zig zag from 1010.91 still in progress:

This count applies to all of the Options mentioned on the 60 min counts page. Today's decline would be the (c) wave of [b] before we rally in wave [c] to complete the zig zag. We seem to need one more leg down to complete 5 waves for (c).

SPX 60 min - first bullish alternate under Option 4: impulse up from 1010.91:

This count has been relabelled since the decline below 1056.88 invalidated the [i]-[ii]-(i)-(ii) count shown on the 60 min counts page. It simply means we have only completed wave [i] of minor A up and wave [ii] is in progress in the form of an expanded flat. Its not a great count, but looks valid to me.

Again, we seem to need another leg down to complete the 5th wave  of wave v of (c).

SPX 60 min - second bullish alternate under Option 4: leading diagonal for wave A of (Z):

As with the above counts, it looks like we need another leg down to complete 5 waves for wave [c] of B before we see a rally in wave C.

Assuming we make a 5th wave down (which is also what I'm expecting to see on the bearish counts) I'll be watching the rally up from there closely. 

On those bearish counts, the rally will be wave [4] of iii (using the Option 2 degrees) and will have to stay below the low of wave [1] of iii which is at 1063.91. If we take that out in an assumed wave [4], the labelled count would be invalidated and it would be a warning that the bearish counts (as currently labelled) are not playing out and that one of these bullish counts could be in play.

Its possible that (with some re-labelling) a new low today would be the end of wave [1] down from 1100.14 instead of where it is currently placed. If that's correct, then it could retrace all the way back up to 1100.14 and we'd still be in the bearish count. However, my first reference point for the purpose of guarding against these bullish counts would be that 1063.91 low mentioned above.

The invalidation point for all of these bullish counts is the low at 1010.91, so they could remain valid for a while yet unless we start to see more significant declines.