Tuesday, 13 July 2010

22:05 BST - SPX Update

Today's action finally reduced the counts for the decline from 1131.23 to 1010.91 down to one for the main labelling on each of the Options I am following for the decline from 1219.80, namely a 5 wave decline (you'll see from the 60 min chart of Option 2 on the 60 min counts page that for the alternate labelling on that chart, it could be a 3 wave delcine). 

The Options are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page

For the move up from the 1010.91 low, I've been posting the doube zig zag count today, which looks like it could be complete at today's high. This count applies to Options 1, 2, 4 and 5 (though on the chart of Option 5 below I've shown a single zig zag count). For Option 3, I'm labelling part of an impulse up from 1010.91, as you'll see below.

Here's how things stand after today:

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

12 min chart:

Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies a wave iii of (iii) decline once its complete.
Today's high is the invalidation point for the completion of wave ii on the double zig zag as labelled.

Option 2 - Wave [ii] topped at 1131.23

12 min chart:

For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down.

The double zig zag up from 1010.91 would be wave (ii) of [iii], so once complete, we would be in wave (iii) of [iii] down.

Again, today's high is the invalidation point for the complete double zig zag as labelled.

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

12 min chart:

For this Option, 5 waves down from 1131.23 to 1010.91 could be  wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  

It places us now in minor wave 2 up.  I've labelled the start of 5 waves up from the 1010.91 low, on the assumption that we will get a zig zag type move up for wave 2, since we  would be retracing the whole decline from 1219.80, not just the drop from 1131.23.

I'm showing us having completed wave (iii) of what I'm assuming at the moment will be a 5 wave move for wave [a] of minor 2.  This would mean the next pullback will be wave (iv) of [a]. This count would be invalidated if that assumed wave (iv) were to fall below 1028.74, the wave (i) high.

The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that we are now retracing back up in wave (b). Its possible that wave (b) completed at today's high, in which case, we'd now be about to start wave (c) down.

Remember, if there is further downside  to come, we must stay above 999.83 for the leading diagonal count to remain valid. 

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

15 min chart:

For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].
However, as mentioned yesterday, counting a complete 5 waves down to 1010.91 does bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page.

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

12 min chart:

On this Option 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.

For completeness, here's the chart of the double zig zag, zooming in on it from the low of wave (4) of [A], to show how it may count as complete now:

SPX 1 min - complete double zig zag:

16:04 BST - SPX Update

Here's a close up of the chart I posted earlier showing the count from the wave (4) of [A] low at 1058.24:

SPX 1 min chart:

This close up shows the count as incomplete, but what I have as wave (3) could easily be wave (5) and the end of the second zig zag, as labelled in the earlier chart. I think we have to take out the wave (1) of [C] high at 1077.95 without making a new high to invalidate the count shown since wave (4) of [C] can't end below that level.

15:40 BST - SPX Update

Well, the last ending diagonal count was invalidated by the move above 1092.99. So, here's another possible way to count a double zig zag up from the 1 July low:

SPX 1 min chart - double zig zag:

Though I'm showing it as complete, the squiggles allow for a bit more upside, depending on where the labels are put. Wave y will be 2.618 x wave w at about 1101, so that might be where its headed if it hasn't completed at today's high.

14:04 BST ES Update

I can't say this is a high confidence count, but everything I'm watching does seem to be moving higher in a wedgie fashion and on waning momentum.

If its a diagonal, wave (5) needs to be shorter than wave (3), so I think the invalidation point is at about 1089. So, it could be invalidated quite quickly.

ES 5 min chart: