Tuesday, 9 November 2010

21:20 GMT - SPX End of Day Update

This is the chart I've posted previously (labelled as if Option 3 on the 60 min counts page is playing out) showing a potentially complete 5 waves up from the August low and which is the basis of the main count on the 1 min close up chart I've been showing:

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

So, that's the bigger picture for the bearish count I've been posting. Here's the updated 1 min chart showing the count from 1159.71 low (this chart is labelled as if Option 2 on the 60 min counts page is playing out):

Chart 2: SPX 1 min - bearish count:

There does still remain the possibility that we still need another high to complete the 5 wave rally from the August low. - see the alternate labels. As mentioned over the past few days, we'd need to take out the high at 1194.53 to eliminate that possibility.

However, even if we take out that high, there remains the possibility that the 1127.08 high was only the end of the 3rd wave up from the August low so we have a larger degree 4th wave decline to come and then another rally. The bigger picture for this is on the chart of Option 3 on the 60 min counts page. Here's the 1 min chart from the 1159.71 low that shows this (labelled as if Option 3 is playing out):

Chart 3: SPX 1 min - bullish count:

Again, there's the question here of whether we're still in wave [4] of v of (iii) and that will be eliminated if we now take out the high at 1194.53. But this count would then put us in wave (iv) which could take us down to about 1156 if it achieves a 38.2% retracement, but we'd then see a further rally to complete 5 waves up from the August low.

Here's the close up chart I've been posting for the move from the 1227.08 high (I've re-done the label degrees so both main and alternate counts coincide with the main and alternate counts shown on Charts 2 and 3 above):

Chart 4: SPX 1 min - close up:

The main labelling assumes that a top was put in at 1127.08 (on the bear count (Chart 2) it would be the 5th wave of the rally from the August low and on the bullish count (Chart 3) it would be the end of only the 3rd wave from that low).

The main labelling does seem a bit stretched given the size of wave (2) compared to the size of wave (1). However, the high at 1127.08 held so the count is valid.

Having said that, the risk that the alternate labelling is the correct count remains until we take out the high at 1194.53 and invalidate it. So far, on the alternate labelling, we've retraced 38.2% of wave [3], so I'd probably expect a turn around here if the alternate labelling is playing out.

For the main labelling, there are various ways to label the decline from today's high. For the labelling I've chosen, the bear count should ideally stay below the high labelled 2 at 1219.08. It wouldn't be fatal to the bear count if we take that out. It could well be that the low I've labelled as wave 1 is, in fact, only wave iii of 1, with the 1219.08 high being wave iv of 1 and the low at 1208.94 being the end of wave 1.

The crucial high for this count is, in my view, 1226.84. While that remains intact, the possibility remains that we made some sort of top at 1127.08.

So, I'm watching 1219.08 (taking that out would invalidate the main labelling on Chart 4 above, but wouldn't void the bearish count) and 1226.84 (taking that out would invalidate the labelling for the main count and make it very unlikely that a top was put in at 1127.08)  and 1194.53 (taking out that high would invalidate the alternate labelling on Charts 2, 3 and 4).