Friday, 29 October 2010

21:10 BST - SPX End of Day Update

Once again we're left waiting to see whether the bullish or the bearish count is playing out, that is, whether we've seen a top to the rally from the August low or whether there's still more upside to come.

The charts below show a close up of recent action. For the bigger picture please see the 60 min counts page where the bearish count is shown on the charts of Options 1 and 2 and the bullish count is shown on the chart of Option 3. This is how I'm labelling them at the moment:

Bearish count:

SPX 1 min - bearish count:

This [1]-[2]-(1)-(2)-1-2 is what I'm sticking with for now. Wave 2 has a complex look about it, but essentially, I've labelled it as a  zig zag for wave w and a triangle for wave y with  and expanded flat type correction for wave x dividing them. On this basis it would likely be complete today. 

However, it may be that wave x should be at the 1179.70 low and wave y is a second zig zag with possibly more upside to come.

If there is more upside to come in wave 2, the invalidation point for this labelling remains 1189.53 on the main labelling so that shouldn't be exceeded.

If we take out the 1189.53 high that invalidates the main count. It would still leave the possibility of a [1]-[2]-(1)-(2) intact, but that would be invalidated above 1191.44. This wouldn't be my favoured alternate count.

If we do take out 1189.53, my favoured alternate count is the one I've referred to in previous days, but which I've now shown as the alternate count on this chart for ease of reference. For this alternate count, the high of 1196.14 would be the invalidation point.

Bullish count:

SPX 1 min - bullish count:

On this count, I've continued to label it as I did yesterday,  as if we're in wave [E] of the triangle, but as mentioned then, we could still be in wave [D], in which case, I'd expect the high at 1189.53 to be taken out before we drop again in wave [E].

On this count, the high at 1196.14 shouldn't be exceeded until we complete wave [E] and wave [E] must stay above the low of wave [C] - that's at 1171.70 on this labelling.

If the 1171.70 low is taken out, I'd have to consider it likely that we'll see more downside in wave iv, possibly down to the 38.2% retracement level at about 1152.

So, with today's sideways action, nothing has really changed since yesterday.

On the counts as I've labelled them, the levels I'm watching are 1189.53 and 1196.14 on the bear count (above these levels I'd consider the risk of more upside to be high) and 1171.70 on the bullish count (below which I'd think the risk of more downside increases).

Have a great weekend!