Monday, 11 October 2010

15:41 BST - SPX Update

With another new high for the rally from the August low, here's how its looking to me at the moment. Firstly, here's the ending diagonal shown in Chart 1 in Friday's end of day update:

SPX 1 min - ending diagonal wave (v) from the 1131.87 low:

As noted on the chart, if this count is playing out, wave v of (v) has to stay below 1176.18 in order to remain shorter than wave iii. If we're only in wave iii of the diagonal, it has to stay below 1183.41.

Here's the impulse wave up from 1131.81 shown in Chart 2 in Friday's end of day update:

SPX 1 min - impulse from 1131.87:

If this is what is going on, we may be getting an extending wave [5] of v or, we could be seeing wave v of (v) itself developing in a series of ones and twos. 

The alternate which has to be considered when ones and twos appear is a diagonal - this one would be a diagonal for wave v  of (v) with wave (1) of the diagonal at the high of 1165.99, wave (2) at the low of 1161.60 and wave (3) in progress - I've sketched in the lines of the diagonal. If wave (3) is still in progress, it has to stay below 1176.18 for the diagonal to remain valid. It may be that wave (3) ended at 1167.73 (where I have the wave (1) of [5] label currently), and today's low was wave (4). In that case, wave (5) would have to stay below 1170.61.

So, those are the possibilities I'm looking at at the moment - until we see a decisive and impulsive move down, the trend remains up. The first level I'm looking at to consider we may have seen a top is 1161.60, as noted in Friday's end of day update.