Thursday, 9 September 2010

18:29 BST - SPX Update: 1 min close up - wave ii high on the bearish counts?

Although we really need to get below 1097.23, this sudden move down suggests that we may well have seen a top to the move off the August lows which would be wave ii up on the bearish counts. Assuming we did top at today's high, here's how I'd count it:

SPX 1 min close up: 

The move off today's high down to 1106.06 is overlapping but can't be a leading diagonal because the 3rd wave is longer than the 1st. So, I've counted the initial leg down from the high as part of wave (5) up, with the lower high at 1109.92 as a truncated 5th wave. From there, its easier to count 5 non-overlapping waves down to 1106.06, followed by an expanded flat.

On this count, we'd now be in wave 3 down. If its right, the next move back up should be a wave 4 correction and would have to stay below the wave 1 low at 1106.06. If we take that out in an assumed wave 4, it may be possible to count a set of ones and twos down, but that would require the high labelled 2 at 1109.64 to remain intact. Above that, and more upside would probably be more likely.