Tuesday, 7 September 2010

15:37 BST - SPX - Bullish counts update

Today's decline also fits in with the bullish counts which all needed 5 waves up from 1040.88 as part of their bullish moves off the July low - please see the update on those counts that I posted on Friday.

Here's the close up chart relating to the count shown on chart 1 of that previous update:

SPX 1 min - wave [c] of a zig zag from the July low:

For this count, 5 waves up from 1040.88 is wave iii of (i) of [c] within a minor wave 2 corrective rally. So, if we're now in wave iv of (i), we need to stay above the wave i high at 1065.21 in order not to invalidate the count. If we drop below it, then we'd have to assume that wave (i) ended at the 1040.58 high and that the retracement down would be wave (ii). I can't say it would look very good, so I might then start to prefer the other two bullish counts. However, this bullish count won't be invalidated unless we take out 1039.70. There would still be a possibility then that we are still in wave [b], but again, it wouldn't look that great and the bearish counts might then start looking more likely.

For the other two bullish counts, 5 waves up from 1040.88 would be wave (i) of [iii] for the count shown on chart 2 of Friday's update and wave [i] of C for the count shown on chart 3 of that update. 

So, assuming those 1st waves are now complete, we'd have to stay above 1040.88 on this current pullback (though as I mentioned on Friday, 1039.70 could possibiliy be the starting point and, so the invalidation point for these counts). If we don't, focus would have to switch to the bearish counts.