Tuesday, 10 August 2010

21:19 BST - SPX Update

The Options referred to below are different ways to count the move down from 1219.80 to 1010.91 and you can see them on the 60 min counts page, which will put the charts below into context.

The 10 min charts below show various ways to count the rally from the 1010.91 low on 1 July in the context of the larger picture shown on those 60 min charts.

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c).

Here are the 10 min charts:

Options 1 and 2 - from 1010.91, a double zig zag:

I'm only showing the 10 min chart of Option 2 since the counts are now the same under both these Options, namely, a single zig zag which is complete at 1129.24. Here's a more zoomed in look:

SPX 1 min:

I'm showing a bearish count for the action since 1129.24. Obviously, for this count to remain valid, we need to stay below 1129.24. 

To confirm the bearish count, to the downside, we need to drop below the high at 1117.88 which, on a bullish count, could be a first wave in an impulse up from today's low - taking it out would likely preclude that since it would make the move from today's low a 3 wave affair.

We then need to drop below 1111.58 to avoid a possible 1-2 count up from today's low, which, on this zig zag count would be part of an on-going wave c.  

After that the levels we need to take out are the same as yesterday. Taking out 1107.17 would be the next level to watch to gain confidence in a top. While that holds, we could have a 1-2 up from there given today's action.

However, for the moment, the main level to watch remains 1088.01. Taking out 1088.01 would provide a higher degree of confidence in a top since that's the last low that has to survive if wave c is going to extend. on this labelling.  So, until we take out that level, the risk of further upside remains.

Option 3 - from 1010.91, a triple zig zag:

This too, can count as complete at 1129.24 and that's how I've labelled it for the time being. Of course, 1129.24 must remain intact if that is the case.

To the downside,  the levels to watch on this count are the same as under  the single zig zag under Options 1 and 2. While 1111.58 holds, we could have a 1-2 up from there in a continuing (c) wave; while 1107.17 holds, we could have a 1-2 up from there in a continuing (c); while 1088.01 holds, the risk is that 1129.24 was only wave (a) of the final zig zag.

Option 4 - from 1010.91, a double zig zag:

From the low at 1088.01, the count on this chart is the same as the count from that level under Options 1 and 2, so the same comments apply here.

Don't forget the bullish alternative count (see under the 60 min counts page for the bigger picture).

Here it is on a 1 min chart:

SPX 1 min - Option 4, bullish alternative count:

Given the number of ones and twos appearing there remains a possibility that this is a leading diagonal from the 1010.91 low and the high at 1129.24 could be the completion of it. If so, or if it is nearly complete, I would count it as wave [i] of A and we should see a decent retracement in wave [ii] before a wave [iii] kicks off. Obviously, any wave [ii] retracement must stay above 1010.91 for this count to remain valid.

Option 5 - from 1010.91, a single zig zag with an ending diagonal for wave (c):

As explained in last night's update, a complete ending diagonal can be counted into the high at 1129.24. I've labelled it as such. However, we must take out 1107.17 to preclude a continuing wave v in progress where 1129.24 was only wave [A] and 1111.58 was wave [B]. 

As yesterday therefore, that 1107.17 level remains important on this count. If the ending diagonal still has more upside, then it has to remain under 1147.91  since wave v must be shorter than wave iii. Moving above that will invalidate the ending diagonal, but one of the other corrective zig zag counts would then simply replace it on this Option.