Monday, 1 November 2010

16:49 GMT - SPX Update on the bullish and bearish count - possible count from today's high

If we have topped on the bearish count as suggested in the first chart in my last post, I'd be looking to label the decline from today's high something along the lines shown as the main labelling on the following chart:

SPX 1 min close up from today's high:

As you can see, it looks to me like we need another leg down to complete a larger 5 waves down from the high. It may be that 5 waves down completed where I have wave 3 labelled, by making wave 2 an expanded flat ending where I have the wave ii of 3 label currently. However, the rally from the wave 3 low is about a 38.2% retracement of wave 3, so presently consistent with a 4th wave so I'll stick with that count for the moment, but its worth keeping the other possibility in mind.

The alternate labelling shown relates to the bullish count and assumes that today's high was wave (iii) of [i] of C and we're now in wave (iv). Here's the larger picture chart of the bullish count:

SPX 1 min - bullish count:

If the alternate labelling on this chart applies, and we've in fact topped on this count, then the count in the first chart above for an impulse down in formation would apply here too.

On the bearish count, we need to stay below 1195.81 now and we have to take out the low at 1171.80 in a clear impulsive fashion. Until we do that, further upside remains on the table.

Bear in mind that taking out 1171.70 isn't a guarantee that the bearish count is playing out or that the bullish count topped as per the alternate labels. Wave (iv) on the main labelling on the bullish count can take out that low without invalidating the count, so we'll just have to watch the character of any further decline and retracements to try to judge whether the bullish or bearish counts are playing out. 

However, as long as we're above 1171.70, I'd consider that further upside is likely.