Friday, 6 August 2010

23:40 BST - SPX Update - wave (4) and (5) of [C] to complete a zig zag or double zig zag

Here's the count I didn't show in tonight's update, where we bottomed in wave (4) of [C] at today's low and started wave (5) up. You'll have to refer to the bigger picture charts to see how deep a retrace wave (4) was (if we had dropped below 1104.32, this possibility would have been invalidated). However, the main point of showing it is to show the count from today's low:

SPX 1 min - heading up in wave (5) of [C]:

If its an impulse, we may well have completed 3 waves of it so only one more up and down to go. If this is right, it may not get much above the high at 1128.75 and may even truncate, unless wave 5 is going to exceed a 1.618 extension of wave 1 and even that assumes that wave 4 doesn't retrace more than 23.6% of wave 3.

Even if the wave 3 I've labelled were to go a bit higher, to about 1122, where it would be a 2.618 extension of wave 1, the same point arises, that wave 5 would have to exceed a 1.618 extension of wave 1 to get above 1128.75.

And of course, although I'm showing a bullish count for the move up from today's low (which could be applied to any of the bullish options I've been showing today - see tonight's update for a summary), at the moment, it counts as only 3 wave, so could be all (or most of) a 2nd wave correction - see the second and third charts in tonight's update.

As I said in tonight's update, if the bearish counts are playing out, we need to see an immediate drop on Monday. Taking out the low at 1107.17 will start to raise questions about the bullish counts, but will not invalidate them. For the bearish case to gain credence, we need to take out the 1088.01 level (the count in the chart above will be invalidated if we drop below 1104.32 before making a new high or before we get 5 waves up from the 1107.17 low and the ending diagonal [c] wave will be invalidated at about 1096).

Lets' see what happens.