Monday, 27 September 2010

21:16 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for 5 waves up from the August low to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context (the following charts are based on the bearish count shown in Option 1on that page).

Here's the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

Here's a closer look at the action from the wave iv of (v) low:

Chart 2: SPX 1 min - 5 waves up from the August low close up:

I've kept the count in the last intra day post showing 5 waves into today's high at 1149.92.  As I said on Friday, its always going to be difficult to label a wave that shoots straight up and then chops sideways. As I've been saying in the intra day updates, until we see something that is decidely impulsive to the downside, the trend remains up. So, we can attempt to place labels on the move with a view to identifying a potential top, but ultimately, the first indication will be wave behaviour consistent with a top. 

As you can see, I've labelled what may be the start of an impulse move down from today's high. Its certainly more promising than anything else we've seen over the past couple of days and I like the fact that its taken out the low I had labelled as wave [4] of v and moved into the price void created by Friday's move up.

Still, we need to see more - once 5 waves down is complete, for wave (1) on my labelling (as you can see, I've labelled a complete wave (1) as  a possibility),  the retracement in wave (2) will have to stay below the high at 1149.92, obviously. 
If it can do that, we need to then see another 5 wave impulse down for wave (3) that is clearly stronger than wave (1) and moves decisively below wave (1) and deeper into the price void created by that straight line move up on Friday. It would be nice if this wave (3) could take out the low at 1122.79, but it may be asking too much. However, what will be critical is that once wave (3) ends, the assumed wave (4) retracement stays below the low of wave (1).

So, there's a wide range to watch - 1149.92 to the upside and 1122.79 to the downside - Friday's move means there aren't really any reference points before that low. However, as this wave down develops, (assuming it does and its not just part of a corrective move prior to further upside) other reference points will be created that can be used to assess whether or not this move down is likely to continue.