21:35 BST - SPX Update

The bottom that was expected does appear to have occurred today, but whether we are now in the process of retracing the whole of the decline from 1131.23 to 1010.91 in a 2nd wave or a substantially smaller portion of it in either a 2nd or 4th wave (or the whole of the decline from 1219.80 - see Option 4 below) remains undecided - see my post from this morning describing what a bottom in the counts I am following might mean. 

Here's how each count looks at the moment - remember, any one of the counts shown could apply to each of the Options (as to which, see the 60 min counts page for context). I've simply shown the different counts on the charts of the different Options for illustration purposes.

Option 1 - Wave (ii) of [iii] topped at 1131.23

7 min chart:

On this count, the low today completed 5 waves down from 1131.23. This means we should see a substantial retracement either in a 2nd wave (on this Option) or a (b) wave (see Option 4 for example, where 5 waves down would complete wave (a))

Obviously, on this count, the low of today has to remain intact, otherwise, one of the other counts is probably in play.

I've labelled the rally so far as waves [A] and [B] of a zig zag, but if its a wave ii as on this Option, its more likely to be a double zig zag or we're just seeing the initial waves of wave [A]. 

A likely target area for wave ii is the 61.8% retracement level at about 1085, which you can see from the chart, is the top of an area of resistance starting at about 1070.

Option 2 - Wave [ii] topped at 1131.23

7 min chart:

I've labelled the rally from today's low as waves (A) nd (B) of a zig zag on this count. The (C) wave should get it to around the 38.2% retracement level, just below an area of resistance.

As this is wave [4], it can't end above the wave [1] low at 1074.63. If it does, then this count is invalidated.

I showed ealier a possible complete single zig zag where wave (C) was an ending diagonal - if we take out today's low without a further 5 wave rally, then that is likely what we have seen.

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

7 min chart:

The comments made in respect of the count shown in the chart of Option 2 apply here also, with the same invalidation point.

If the alternative I've indicated on the chart applies, on this Option it would mean the end of wave [v] of the leading diagonal and we would now expect a deep retracement of the whole of the decline from 1219.80. The first warning sign that this might be happening would be if we exceed the wave i low on this retracement, which would invalidate this count, but ultimately, taking out the wave [iv] high at 1131.23 would be the deciding factor.

Option 4 - Wave [b] of minor Y within intermediate [X] topped at 1131.23

15 min chart:

On this count I'm expecting a 2nd wave rally, but it would only be retracing the decline from 1082.60. On that basis, a single zig zag may suffice, so that's how I've labelled it.

Taking out the high of 1082.60 would invalidate this count.

Option 5 - Minor wave X within intermediate wave [X] topped at 1131.23. Now in minor Y down

8 min chart:

On this count, I'm looking for a 4th wave rally, for which a single zig zag shoud suffice on the basis of the way I've labelled today's move. If we take out today's low without a further 5 wave rally, its likely that the completed zig zag I posted earlier was the correct count. We would then be into wave iii of (iii) down.

The invalidation point here is the wave i low at 1085.83.

20:14 BST SPX Update

Here's another possible count from today's low, which means another 5 waves up before this rally ends:

SPX 1 min chart:

19:49 BST - SPX Update

It possible we've just seen a completed correction as follows:

SPX 1 min chart:

Even on those counts where I'm looking for a 4th wave up, its only a 23.6% retracement, so the risk is its only the first zig zag in the correction, so we'd have to be alert to more upside.

19:00 BST - SPX Update

It does look like 5 waves up off today's low - perhaps the first leg of a zig zag. Whether its a 4th wave or a 2nd wave, we'll have to wait and see (see my post from this morning as to what a bottom from yesterday's high might mean):

SPX 1 min chart:

Of course, it could also be labelled as one complete zig zag, an (X) wave and we're now into the second zig zag, in which case, we'd probably see another 5 waves up from about current levels (it shouldn't take out what would be the (X) wave low) rather than seeing more of a [B] wave pullback before another 5 waves up.

17:37 BST - Dollar Update

Well, the dollar gave it up today, bringing in the more bearish alternative count from the earlier charts, which put us in either a larger single zig zag then the one originally labelled or a double zig zag. Here's the re-labelled chart from which I've deleted the old count and put the double zig zag as the main count:

Dollar 60 min elliott wave chart:

If this count is correct, we could see a bottom in the dollar failry soon. However, caution is required since there are other alternatives:

1) if we are actually in a larger single zig zag, where (w) would be (a) and (x) would be (b), we are now in wave (c). That requires 5 waves down from where wave (b) would be and so far, there are only 3 waves down. So, we'd need another up and down sequence before this correction is over. It therefore implies some further downside, but would not be inconsistent with this count which puts us in a wave [iv] of minor 3 correction; or

2) we might only be in wave a of (y) for the double zig zag, and again, we'd need 5 waves for wave a and we only have 3 so far. This alternative would imply a good deal more downside and it might even mean that the count I have that has us having topped in minor 5 and intermediate wave (1) is in play, so that we would now be in intermediate wave (2) down rather than minute [iv] of minor 3.

So, reasons to be cautious to the long side for the time being, though there are reasons to look for a bottom soon, given that we are still at an area of support. Of course, what we want to see is 5 waves up and a 3 wave retracement that doesn't break the last low. It would be no guarantee that the decline is over since it could still be a corrective rally, but it would be a start.

16:02 BST - SPX Update

Here's the 1 min chart I posted earlier, updated with today's action;

SPX 1 min chart:

We should have at least one more new low today if this is correct. Be aware that it could be wave (5), not wave (3), which would also be the end of wave [5], with the implications I laid out earlier in respect of each Option.

If we take out the 1119.06 low I've marked  before we make a new low, I'd have to assume that there's a hidden wave in there to make 5 down from where I have wave 4 or that that low was the end of wave (3) , we then had a very small wave (4) and the current low was wave (5).

13:21 BST - Dollar Update

The dollar doesn't look too hot on the 60 min ichimoku chart:

Dollar 60 min ichimoku:

Price and the lagging line have broken beneath the cloud and the turning and standard lines, whilst still in the cloud, are turning down, with price firmly below them both. We did have this same situation back on 25 June and the dollar made an unexpected turn up and rallied back above the cloud as it bottomed in the presumed wave (ii), taking the lagging line and the turning and standard lines with it. If we are bottoming in a wave [2], then it should be capable of doing this again, but we'll have to wait and see if it can.

On the elliott wave chart, the bullish count suggests that it will:

Dollar 60 min elliott wave chart:

However, the more bearish count that calls for a (c) or (y) wave down remains very much a possibility at this stage. Really, it could go either way. The 85.215 level remains key to the count as labelled, but the 85.025 level will put an end to this bullish count for the time being. So, those are the main levels to watch, as they have been for the past few days.

 

12:52 BST - ES Update

Here's the 5 min chart of ES with the nested ones and twos count which I have on the Option 5 chart of SPX:

ES 5 min chart:

From the presumed wave [4] high (which marked yesterday's high in SPX), its possible to count 5 waves down to the overnight low. If correct, that would complete wave iii on this count and we would expect a wave iv rally today. On  some other counts I'm following, this 5 waves down from the wave [4] high would represent a complete 5 down from the 21 June highs and would imply a deeper rally in a 2nd (or a B) wave. See my post from earlier today on SPX.

However, as you can see from the chart, the main alternative is that the decline from the presumed wave [4] high (which I can count as a 3 or a 5) is actually part of an expanded flat type correction, with a C or Y wave up to come, and which may have started from the overnight low. 

The rally from the overnight low doesn't look too impulsive, so chances are it may be part of a correction. You can see that I've labelled another possibilty, that we're still in wave (4) of [5], so that too needs to be borne in mind since it may mean we are closer than under the main alternative to a low for this decline.

You should also note that if I move the wave [4] label one peak to the left, which was a pre-market high in ES, instead of aligning it with the cash session high, there is a clear 5 waves down to the overnight low, so a larger rally of some degree (see my SPX post from earlier today) would be in the works now.

10:17 BST - SPX Update - Possible Count From Yesterday's High

As you can see from last night's update, all the counts I'm following, shown on the short terms charts of the 5 Options, have us in a 4th wave of some degree. Remember, each of these counts could be the one that is in force in relation to all of the Options. We just can't know at the moment which count is playing out (in the same way that we can't know at the moment which Option is correct - see the 60 min counts for the bigger picture in relation to each Option). 

As I said last night, the decline from yesterday's high doesn't look like 5 complete waves, which is what we'd need to see for a 5th wave down.

Here is a 1 min chart showing a possible count for the move from yesterday's high so far:

SPX 1 min chart:

This count suggests that we still need another down-up-down-up-down to complete 5 waves. As you can see from the chart, a possible target for the end of the 5th wave is about 1020. Of course, this is just a possible target and could be exceeded, but equally, may not be reached.

Of course, for each of the counts shown, the completion of 5 waves down from yesterday's high will mean different things:

For the count shown on the chart of Option 1, its a plain and simple 5 waves down from 1131.23, which would complete a wave i down (for Option 1 itself) or a wave A of some degree on the more bullish Options, 4 and 5. So, we'd then expect to see a 2nd or B wave rally retracing the whole of that decline from 1131.23, so it could be substantial. For example, if the decline ends at about 1020, a 61.8% retracement would take us back up to about 1090.

For the count shown on the chart of Option 2, we are in an extending 5th wave, with 3 nested ones and twos. The end of 5 waves down from yesterday's high would complete wave [3] of v (using the label degrees on that chart). So, if that is the correct count, we would see a bounce in a 4th wave on all of the Options, not a 2nd wave, so it would be expected to be more of a moderate bounce than if the count shown on the chart of Option 1 is in force. It would be retracing the drop from 1085.95, so if we end wave [3] at about 1020, a 38.2% retracement would take us back up to about 1045.

For the count shown on the chart of Option 3, 5 waves down from yesterday's high would, on the main count shown on that chart, put us at the end of a 3rd wave also ( a 3rd wave within a 5th wave), so, again, only a relatively moderate bounce in a 4th wave would be expected. We'd be retracing the drop from 1082.60, so if the decline ends at about 1020, the 38.2% retracment would be around 1045.

Only if the alternate count shown on the chart of Option 3 is in play would we expect a more significant 2nd wave rally retracing the whole of the decline from 1131.23. If the decline ends at about 1020, then a 61.8% retracement would take us to about 1090.

For the count shown on the chart of Option 4, 5 waves down from yesterday's high would be the end of wave i of (iii), using the label degrees on that chart. We would then get a 2nd wave retracement, but it would only be retracing the drop from 1082.60. A 61.8% retracement would take us up to about 1060 (and 1082.60 would be the invalidation point for this count since wave ii could not exceed that level).

For the count shown on the chart of Option 5, 5 waves down from yesterday's high would be the end of wave iii of (iii), using the degree labels on that chart. Again, we'd be looking then for a 4th wave rally, retracing the drop from 1099.64. If the decline ends at about 1020, a 38.2% retracement would take us up to about 1050.

As I mentioned last night however, we can't rule out the possibility that we are in an expanded flat type correction with the decline from yesterday's high being the B or X wave of that correction, wth a C or Y wave back up to come. 

So, if we get just a quick down move (to about where I have the green 3 on the 1 min chart above) and then rally hard beyond what would be expected for a 4th wave bounce (say a 38.2% retracement), I'd be on alert for this possiblity playing out since we'd only potentially have three waves down from yesterday's high. If we rally above 1042.44 (the low of what I have labelled as wave 1 of (3)), then, on the count as I have labelled it, we would almost certainly have only have three waves down from yesterday's high and this expanded flat type correction would then seem to be the most likley count for this move (it would likely be a 4th wave on all of the counts shown, except for the count shown on the chart of Option 4 where it could be a 2nd wave, so could retrace up more deeply than on the other counts - I've mentioned the 1060 area above).