Thursday, 17 June 2010

22:19 BST - SPX Update

I won't post individual charts for each of the 5 options tonight. Suffice it to say that Options 1, 3 and 4 may either be in an immediatley bearish position, or they may require one more up leg to complete their respective moves, as I explained in last night's update.

Options 2 and 5 require a 4th wave to complete before resuming their upward movement.

So, taking the action from the 1118.74 high of yesterday, which marked the end of what appears to have been an ending diagonal which can be applied to all the options, here are the counts:

Immediately bearish:

SPX 2 min chart:

This count is immediately bearish for Options 1, 3 and 4.

Obviously, it will be invalidated above the wave [2] high. It would be possible, however, to count the move since [1] as wave [2] in that event. But that would be invalidated above 1118.74. We're very close to both of those levels.

Moderately to very bullish:

SPX 1 min chart:

 This count is moderately bullish for Options 1, 3 and 4, meaning that the high of 1118.74 was just a 3rd wave high and today's moves were  the 4th and part of the 5th wave needed to complete the counts before we move down under those options. 

Wave [3] would be 1.618 x wave [1] at about 1117, so it would probably go to at least the next higher fib level (2.618) at about 1123. Since wave [2] was a deep correction, I'd expect a shallower affair for wave [4].

Under Option 2, the expected 5 wave move up from today's low could be part of [5] of  i within a 5 wave move for (c) of [ii], or,  it may be the entirety of the (c) wave of [ii].

Under Option 5, 5 waves up from today's low would be the 5 waves required to complete three waves up from 1042.17. 

An alternate count for the moderately bullish/very bullish case is that the whole of the sideways move today was a 4th wave and the late rally was just the start of the 5th wave (ie, no [1], [2]).

Alternate bullish count:

So, we'd now be in wave [1] up for the very bullish counts or, for the moderately bullish counts, the end of the rally from 1106.85 may represent the end of their up moves

19:51 BST - SPX Update

Funnily enough, its the bearish count that seems easier to make on SPX at the moment. On the bullish count, its difficult to see impulsive movement from today's low, but of course, it may still be in development. Or, we may still be in the 4th wave - maybe its forming a triangle.

Anyway, here's how I'm currently counting the action for the bearish counts:

SPX 2 min chart:

Obviously, however, until we take out the levels mentioned in my previous post, there remains a risk of the further upside even on the bearish counts.

17:09 BST - SPX Update

In last night's update I mentioned the possibility that even on the bearish counts (Options 1,3 and (in the near term) 4), the leading diagonal shown during the session might only have been the end of a 3rd wave.

So far, that remains on the table. I think today's action coupled with what happened at the end of yesterday, probably counts more naturally as a 3 wave move for a 4th wave. As an impulse, it would only be partially formed and has much to do to prove itself as an impulse underway.

Here are two charts showing two ways to count from the diagonal (ignore the degree of the labels - they are just rough charts not related to any particular one of the various options). 

1 min chart - 4th wave count:

2 min chart - start of an impulse wave down:

On the bearish options 1 and 4, the 4th wave possibility only gets negated below 1083.20 on the way I have them labelled. On Option 3 its negated below 1101.20.

At the moment, on Options 2 and 5, it looks like a perfect 4th wave.

12:32 BST ES Update

On the bearish count, looks like the futures may be in the process of finishing off an ending diagonal. Here's how it looks at the moment on ES:

ES 5 min chart:

There's alot of time and a lot of data coming out before the cash open and, of course, we could be in one of the more bullish counts as outlined in my post after the close last night for SPX. So, caution required.