Wednesday, 27 October 2010

16:16 BST - SPX Update on the bullish and bearish counts

The ending diagonal shown in Chart 2 of yesterday's end of day update has now been invalidated with price reaching the dotted blue line shown in that chart.

That leaves the completed ending diagonal shown in Chart 1 of that update and the new bullish count I posted earlier today (see here). Here are the close up charts updated with the action so far today.

SPX 1 min - bearish count:

On this count, today's decline would be wave i of 3 of (3) down. Its not clear whether its complete yet. If things are really bearish and we just keep falling, it may start to look like the decline is wave (3) itself. However, one step at a time - I'll just see how things go.

SPX 1 min - bullish count:

The possibility of a triangle for wave iv will be invalidated below 1171.17. In that event, I'd be looking at wave iv as an expanded flat type of correction. I'm not sure its complete yet. the 38.2% retracement of wave iii is at about 1152, so there could be more downside to come in this wave iv. However, we're now at the 23.6% retracement, so its an area to watch for a potential reversal.