Thursday, 2 September 2010

19:04 BST - Dax and FTSE update

While SPX has been moving sideways, I though I'd take a quick look at the Dax and the FTSE.

Here's the Dax daily chart (it hasn't been updated with today's action, but the close today was 6083.85):

Dax Daily: 

Last time I posted on this I was thinking we may have seen a top - see the post of the 15 min chart by clicking here - (we were in the midst of the wave I've labelled (i) in the daily chart above as it turns out).

You can see from the daily chart what looks like a nice 5 waves down from the August high (the Dax, you might recall, took out its April high, diverging against the other main indices like SPX, FTSE, etc). So, it seems like there's a good chance that a top was seen in early August.

However, looking at the 60 min chart from the August high, you can see that like SPX, it can be labelled as an impulse or as a double zig zag (see the black lines):

Dax 60 min:

If its a zig zag, it would likely be part of the (X) wave labelled as an alternaive on the daily chart. Even if its 5 waves down from the August high, it could be an [a] or [c] wave within that (X) wave correction. This would imply  further highs to come, much like the bullish alternate counts under Option 4 which I show on SPX (see the 60 min counts page and the last update on those counts).

In this respect, the Dax, which was outperforming, resulting in its August high, is now in line with SPX - right down to the ambiguity over whether its an impulse or a corrective wave down from its high.

The FTSE caught my eye because its getting so close to it recent high at 5418.58. 

Last time I looked at it,  it seemed like we were topping if we hadn't already done so - see the last post here. In fact, we went on to make a slightly higher high at 5418.58 on 9 August. I can still count that into a nice top with the same labelling shown on the chart in that last post.

The only problem is that the price action since that high isn't easy to count as 5 waves down. Furthermore, the move up from the  low made on 25 August is not that far off the 9 August high.  

I'm starting to think that maybe FTSE hasn't quite finished the wave [ii] correction labelled on the chart in the previous.

So, here's a possible count to accommodate a further push up to complete wave [ii] (this daily chart hasn't been updated with today's action, but FTSE closed at 5371.04):

FTSE daily:

You'll note the alternative count shown on this chart, which would mean that the July low could have been the start of a major move up in the FTSE, again, in line with the bullish alternate counts under Option 4 for SPX.

Here's the 60 min chart showing the main count in close up from the 5418.45 high:

FTSE 60 min:

You can see that the move down from that high doesn't look like an impulse. It can be counted as such, but it wouldn't be very pretty, as you can see from the alternate labelling. At first look, it could be a leading diagonal, but on closer examination, it transpires that what would be the 3rd wave of such a diagonal is shorter  than the 5th wave. 

So, this zig zag seems to be the best way to count it if we take out the 5418.45 high. If we don't take out that high, I'll have to adopt that ugly impulse count. Today's high would be a good turning point for FTSE if it did top in wave [ii] at 5418.58 - its an 88.6% retracement.