The Options referred to below are the different ways to count the move down from 1219.80. There are 5 that I'm following. I won't post individual charts of each tonight, just one for Option 2. You can see the larger context of each on the 60 min counts page and of course you can refer back to last night's update.
The move up from the July low can be counted as a single, double or triple zig zag, assuming it is a corrective move. Following today's action, it remains unclear whether or not we've yet seen a top to the move up from the July low.
Once again, we have to await further price developments.
Here's the chart of Option 2:
SPX 10 min chart - Option 2:
Here's a 1 min chart (the wave degrees and labels relate to the single zig zag shown under Option 3, but the count into the high is essentially the same) showing close up the completion of the final leg of a corrective move up from the July low at 1128.75 and ones and twos down from there:
SPX 1 min - top at 1128.75, ones and twos down:
And here's a chart showing the truncated top at 1126.56:
SPX 1 min - truncated top at 1126.56:
Both of these would be invalidated if we move above the 1126.56 high. The first one could survive as a one-two, with two being an expanded or running flat, provided we don't take out 1128.75, but I can't say I like this. If one of these counts is playing out, I think we need to see the market drop pretty much from the outset next week. The retracement of the move down from the 1126.56 high has nearly reached the 78.6% mark and the bottom of the gap down today, so now would be a good time for it to drop.
I think that if 1126.56 is taken out, we'd have to look at the bullish counts. Here are some possibilities:
SPX 5 min - triple zig zag:
I mentioned some possible targets for the end of the third zig zag before today's sessions - see here. Preferably we need to stay above 1107.17, until a new high is made, but the count won't be invalidated until we break below 1088.01.
SPX 5 min - single zig zag with ending diagonal wave [c]:
Assuming wave (iv) ended today at 1107.17, wave (v) must stay below 1147.91 for the diagonal to remain valid. Again, we wouldn't want to see a drop below that low before a new high is made, but this count won't be invalidated unless we drop to the blue dotted line before making a new high. That's approximately in the 1096 area on Monday, depending on when we hit it.
Another possibility (not shown) is that today's decline was the 4th wave of [C] and we are now moving up in the final 5th wave of [C] in a single zig zag. The 4th wave was a deep retracement, but does not break any rules, so is perfectly valid.
Don't forget also the much more bullish count that I've been showing as a bullish alternative under Option 4. On that count, the decline today would have been wave ii of (iii) up within minor A up. Here's the 1 min chart for that:
SPX 1 min chart - bullish alternative under Option 4:
SPX 1 min - truncated top at 1126.56:
Both of these would be invalidated if we move above the 1126.56 high. The first one could survive as a one-two, with two being an expanded or running flat, provided we don't take out 1128.75, but I can't say I like this. If one of these counts is playing out, I think we need to see the market drop pretty much from the outset next week. The retracement of the move down from the 1126.56 high has nearly reached the 78.6% mark and the bottom of the gap down today, so now would be a good time for it to drop.
I think that if 1126.56 is taken out, we'd have to look at the bullish counts. Here are some possibilities:
SPX 5 min - triple zig zag:
I mentioned some possible targets for the end of the third zig zag before today's sessions - see here. Preferably we need to stay above 1107.17, until a new high is made, but the count won't be invalidated until we break below 1088.01.
SPX 5 min - single zig zag with ending diagonal wave [c]:
Another possibility (not shown) is that today's decline was the 4th wave of [C] and we are now moving up in the final 5th wave of [C] in a single zig zag. The 4th wave was a deep retracement, but does not break any rules, so is perfectly valid.
Don't forget also the much more bullish count that I've been showing as a bullish alternative under Option 4. On that count, the decline today would have been wave ii of (iii) up within minor A up. Here's the 1 min chart for that:
SPX 1 min chart - bullish alternative under Option 4:
So, the market had an opportunity today to provide some indication of whether or not we have seen a corrective top to the move off the July lows, but failed to do so once again. So, we have no choice but to continue to wait and see and all we can do is to monitor the levels that are relevant to the potential counts until one or other is eliminated or becomes unlikely enough to discount it.
Have a great weekend!
