Thursday, 18 November 2010

21:15 GMT - SPX - End of Day Update

The picture hasn't changed too much since my last post. The bearish count is still valid with the high at 1207.43 not yet having been taken out. The bullish counts also remain intact. Assuming we decline from around current levels, its a matter of waiting to see how that decline behaves and what levels it reaches. If we continuing moving up from here, we have to wait and see whether the high at 1207.43 continues to hold to keep the bearish count (and the alternate bullish count) alive.

As usual, the context for these smaller timeframe charts can be found on the 60 min counts page.
Here's the bearish count:

Chart 1: SPX 1 min - bear count:

I've moved the high for the rally from 1175.87 to the high at 1199.36, so a truncated 5th wave. That's because the decline from 1209.29 isn't obviously an impulse, so I'll assume it was part of wave iv of C of (2). From the 1199.36 high, we have what may be the start of a larger impulse down. We'll have to see how it develops.

As I mentioned in the last post, I'd have more confidence in the bearish count if we can now take out the high at 1183.56 in an impulsive manner. That would start to reduce the likelihood of one of the bullish possibilities mentioned below.

Here's the bullish count:

Chart 2: SPX 1 min - bullish count:

For the main bullish count, I've re-labelled the move up from 1173 as a double zig zag, with today's high as wave [A] of the second zig zag. However, its possible that wave (x) also topped today using the count shown on Chart 1 above. If it has, or if we're in the alternate bullish count labelled, we should see an impulsive decline taking out 1173 fairly quickly, much as we'd expect to see on the bearish count, assuming we're going to see another zig zag for wave (y) on the main bullish count.

As I mentioned in my last post, the further alternate bullish count shown in the pink note at the top of Chart 2 remains a possibility until we take out the high at 1183.56. Its odds will be reduced if we do that and will be virtually eliminated if we then take out the low at 1175.87. It will be invalidated if we take out the low at 1173.

So, for the way I've labelled the bearish count, 1199.36 now has to hold for it to remain valid. If we take that out, then the next level to watch remains 1207.43. If that gets taken out, the bearish count will be invalidated. To the downside, taking out the high at 1183.56 will help to increase confidence in the bearish count.

For the bullish count, the main count is looking for a further high to complete wave (x). However, if the alternate is playing out or we topped in wave (x) today, we should see a quick decline that will take out 1173. While we're above 1183.56, the possibility of the further alternate bullish count remains on the table and would imply a new high above 1127.08, probably over the course of the next few days, before any substantial down move is seen.