Monday, 9 August 2010

21:23 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 or nearly complete. Here's a more zoomed in look:

SPX 1 min - top of wave a, wave b and wave c of a single zig zag:

And here's the close up chart I was posting today showing the possibility that we may have topped at 1129.42:

SPX 1 min from 1126.03 high:

Taking out 1120.91, the wave (4) low, would be the first sign that the zig zag is complete. After that, taking out 1107.17 would be the next level to watch to gain confidence in a top. However, taking out 1088.01 would provide a higher degree of confidence since that would avoid the possibility of an extending [C] wave, where 1129.24 was only the 1st wave within the 5 waves required for wave [C]. 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 or nearly complete. I think that, as with the single zig zag under Options 1 and 2, a drop below 1120.91 would be an initial sign of a possible top, but we need to take out 1107.17 to gain confidence in thinking that the triple zig zag might be over. That avoids a possible extending (c) wave. However, taking out 1088.01 would increase confidence in a top considerably. Taking out that lower level would avoid the possibility that it was only wave (a) of the third zig zag that topped at 1129.24.

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 here, its possible its really 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):

From what is labelled as the wave (iv) low of the ending diagonal at 1107.17, I can count a zig zag up to the high at 1129.24. The wave a of (v) high would be at 1127.01 and the wave b of (v) low would be at 1124.92. From there its possible to count 5 waves up, but we can't rule out more upside to come, given that wave c of (v) does look a little stunted.

However, so far, the requirements for an ending diagonal have been met - wave (v) can be counted as a zig zag, its moved beyond the high of wave (iii) of the diagonal at 1128.75 and its shorter than wave (iii), having not (so far at least) exceeded 1147.91.

So, while the trend is still up and we have to go with that, there are reasons to be on the look out for a top around here.
I don't think we can really start to have confidence in a top on this count until we take out 1107.17. That is now the level to watch on this count to confirm a top under this Option.