Tuesday, 5 October 2010

21:11 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I've been  looking for the end of 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.

A new high today meant that the immediately bearish count which had the end of 5 waves from the August low at 1157.16 was eliminated and the near term bullish count became the focus. On that count, 1157.16 was only the high of wave (iii), so we still needed wave (v) up to complete the rally from the August low.

Here's the bigger picture shown on the 60 min chart of Option 1, (which is my overall bearish count for the decline from the April 2010 high) which I've updated to take account of today's move (you can see the 60 min chart for the bullish Option, Option 3, on the 60 min counts page):

Chart 1: SPX 60 min - Option 1 - 5 waves up from the August low:

Here's the close up chart I've been posting today which zooms in on the action from the wave (iii) of [c] high at 1157.16:

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

I don't think the count for 5 waves up from the wave (iv) low at 1131.87 looks too bad.  However, we haven't seen anything yet to suggest a top. 

We need to see an impulsive 5 wave decline. Currently, I'd like to see such a decline take out 1159.11. We then need to see a 3 wave retracement of that decline that holds below the high (presently 1162.76) and for another 5 wave decline to follow. Once we get that, I'll be watching the next retracement up and I'll be looking for it to hold below the low of the first 5 waves down. If it doesn't, I'm going to be very suspicious that further upside may lie ahead.

As to that potential for further upside, at the moment, its possible that the high I've labelled as wave iii at 1152.50 is only wave [1] of iii (and the high at 1162.76 would be wave [3] of iii). If we take out that high in an assumed wave [4] of iii, that possibility will be ruled out. I'd then want to see the low at 1149.21 which I've labelled as wave iv get taken out to preclude the possibility that wave v might extend.

So, the levels I'm watching for now are 1162.76, 1159.11, 1152.50 and 1149.21. Taking out the 1159.11 level will start to suggest that a top may be in. Taking out 1152.50 and then 1149.21 will greatly increase confidence that a top is in at 1162.76 (but obviously, the nature of that top will depend on which of the counts shown on the 60 min counts page is playing out).