Friday, 15 October 2010

21:36 BST - SPX End of Day Update

The counts shown in yesterday's end of day update anticipated that we would see some upside today, which would be the start of the next leg up on the bullish count or a corrective 2nd wave on the bearish count.

Today's action took us up, down and then sideways, but up  a little overall. So, the action hasn't doesn't anything to tell us whether we are in the bullish or bearish count.

The following charts are close ups of the action from the 1131.87 low. You can see the larger context of the following charts on the 60 min counts page.

Here's the bullish count which I've labelled as if Option 3 on the 60 min counts page is playing out:

Chart 1: SPX 1 min - bullish count:

Here, I'm assuming we've started wave [3] of v up. I've put us in wave (3) of [3], but it may be that wave (2) is still playing out, so we have some further downside to come. That's fine as long as we stay above 1155.71 in wave (2) of [3]. If we were to take out that low,  it would look like the bearish count is playing out, making 1184.38 the end of the rally from the August low. 

As I showed earlier, there is another bullish count that may be playing out and which would have less upside than the one shown above. You can see that count by clicking here.

I think I'm starting to prefer that count over the one shown in Chart 1 above simply because its more likely to produce a wave (v) that's in proportion to wave (i). As mentioned in that earlier post, because wave iii is shorter than wave i on this alternate count, wave v would be limited by the size of wave iii, which is 28.67 points. So, if wave iv ended at the low of 1171.17, for example, wave v couldn't exceed 1199.84. This count would be invalidated if we slip below 1163.87 (the wave i high) before we make a new high.

Here's the bearish count which is labelled as if Option 1 on the 60 min counts page is playing out:

Chart 2 : SPX 1 min - ending diagonal from the August low complete at 1184.38:

As you can see, I've shown a [1]-[2]-(1)-(2) down from the high at 1184.38. It may be that we're actually still in wave [2], and this will certainly be the count to follow if we take out 1181.20. In that event, wave [2] would have to stay below 1184.38 in order to keep the bear count intact. If that's taken out, I'll turn my attention to the bullish count. 

So, following today's action the levels I'm watching are: 1184.38 (to keep the bear count alive), 1163.87 (to keep the alternate bullish count alive) and 1155.71 (to keep the bullish count shown in Chart 1 above alive). 

Have a great weekend!