Tuesday, 10 August 2010

21:19 BST - SPX Update

The Options referred to below are different ways to count the move down from 1219.80 to 1010.91 and you can see them on the 60 min counts page, which will put the charts below into context.

The 10 min charts below show various ways to count the rally from the 1010.91 low on 1 July in the context of the larger picture shown on those 60 min charts.

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c).

Here are the 10 min charts:

Options 1 and 2 - from 1010.91, a double zig zag:

I'm only showing the 10 min chart of Option 2 since the counts are now the same under both these Options, namely, a single zig zag which is complete at 1129.24. Here's a more zoomed in look:

SPX 1 min:

I'm showing a bearish count for the action since 1129.24. Obviously, for this count to remain valid, we need to stay below 1129.24. 

To confirm the bearish count, to the downside, we need to drop below the high at 1117.88 which, on a bullish count, could be a first wave in an impulse up from today's low - taking it out would likely preclude that since it would make the move from today's low a 3 wave affair.

We then need to drop below 1111.58 to avoid a possible 1-2 count up from today's low, which, on this zig zag count would be part of an on-going wave c.  

After that the levels we need to take out are the same as yesterday. Taking out 1107.17 would be the next level to watch to gain confidence in a top. While that holds, we could have a 1-2 up from there given today's action.

However, for the moment, the main level to watch remains 1088.01. Taking out 1088.01 would provide a higher degree of confidence in a top since that's the last low that has to survive if wave c is going to extend. on this labelling.  So, until we take out that level, the risk of further upside remains.

Option 3 - from 1010.91, a triple zig zag:

This too, can count as complete at 1129.24 and that's how I've labelled it for the time being. Of course, 1129.24 must remain intact if that is the case.

To the downside,  the levels to watch on this count are the same as under  the single zig zag under Options 1 and 2. While 1111.58 holds, we could have a 1-2 up from there in a continuing (c) wave; while 1107.17 holds, we could have a 1-2 up from there in a continuing (c); while 1088.01 holds, the risk is that 1129.24 was only wave (a) of the final zig zag.

Option 4 - from 1010.91, a double zig zag:

From the low at 1088.01, the count on this chart is the same as the count from that level under Options 1 and 2, so the same comments apply here.

Don't forget the bullish alternative count (see under the 60 min counts page for the bigger picture).

Here it is on a 1 min chart:

SPX 1 min - Option 4, bullish alternative count:

Given the number of ones and twos appearing there remains a possibility that this is a leading diagonal from the 1010.91 low and the high at 1129.24 could be the completion of it. If so, or if it is nearly complete, I would count it as wave [i] of A and we should see a decent retracement in wave [ii] before a wave [iii] kicks off. Obviously, any wave [ii] retracement must stay above 1010.91 for this count to remain valid.

Option 5 - from 1010.91, a single zig zag with an ending diagonal for wave (c):

As explained in last night's update, a complete ending diagonal can be counted into the high at 1129.24. I've labelled it as such. However, we must take out 1107.17 to preclude a continuing wave v in progress where 1129.24 was only wave [A] and 1111.58 was wave [B]. 

As yesterday therefore, that 1107.17 level remains important on this count. If the ending diagonal still has more upside, then it has to remain under 1147.91  since wave v must be shorter than wave iii. Moving above that will invalidate the ending diagonal, but one of the other corrective zig zag counts would then simply replace it on this Option.

19:16 BST - SPX Update - 1 min chart

If we've been seeing a 4th wave correction today, it getting rather large compared to the 2nd wave. That doesn't invalidate it, but it does raise the question whether, perhaps, this is what we're seeing instead:

SPX 1 min:

Obviously, its invalid if we move above 1129.24.

17:34 BST - Dollar Update - 5 wave s up complete?

The dollar can be counted as 5 waves up from the 80.085 low. Here's the 20 min chart I posted this morning, updated:

Dollar 20 min:

Until we drop below the wave [4] low, wave [5] has the potential to extend. If we do drop below that level, if my labels are correct, we should be in wave ii down. 

You can see that a possible target at the 4th wave within wave [3] is also the 61.8% retracement of the move up from 80.085. Obviously, a wave ii retracement will have to stay above 80.085 if this was an impulse up and not a C wave in an on-going correction within a continuing downtrend.

I'll be on the lookout for a 3 wave pullback that ends above that level. Anything that looks too impulsive to the downside should be taken as a warning that we may not have seen an end to the downtrend just yet.

15:15 BST - SPX Update - 1 min close up

Its looking like the alternate count I showed in the close up 1 min chart under Options 1 and 2 in last night's update may be playing out, with a top at 1129.24:

SPX 1 min close up:

We've taken out one of the levels I identified in last night's update, 1120.91, which might give the first sign of a top. However, we now need to go on to take out that 1107.17 level. We should be able to do this if we are going to see 5 waves down from 1129.24.

Of course, we had this on Friday, and that 5th wave never came, so we need to keep a close eye on this. If we're in wave (4), then we can't end above 1126.60 - so in elliott wave terms, that's where we'll know for sure that something is not right with this count, but for me, if we start to move above the 50% retracement level, I'll be highly suspicious.

14:56 BST - SPX Update - 60 min chart

Here's the 60 min chart I've been following (last posted here) SPX is having another go at breaking the uptrend channel from the July low - remember how it bounced sharply up from it on Friday:

SPX 60 min:

All of those indicators currently look pretty bearish - see the notes on the chart.

11:10 BST - Dollar page updated

It shows the updated position on the daily chart. Click on the menu tab above or here.

10:09 BST - Dollar Update

Looking at this 20 min chart of the dollar, (showing the count from the wave (iv) of [v] high at 81.977) its possible that we have seen the end of intermediate wave (2) down;

Dollar 20 min:

You'll see from my last update that I mentioned the possibility that where I had marked a 2nd wave of wave v down, at 80.945, was actually the start of wave v and the drop from there was all or part of wave v. That possibility may be what played out in the end, as you can see from the above chart.

On the provisional labelling I have from the 80.085 low, we haven't yet got 5 waves up, but it looks like we might get that shortly. However, even if we do, we need to be wary of the possibility that this rally is just part of an expanded flat wave iv correction and that we have another down leg to come. This arises because from where I have [W] within wave iv, looks like 3 waves, so taking the count from there, the drop to 80.085 could be a [B] or [X] wave.

Warning bells would start to ring if we take out 80.425 before making a new high above 81.137, if my count from the 80.085 low is correct.

Another risk to watch out for on the downside: this low at 80.085 could just be wave (iii) of [iii] of C. Here's a larger view to show you what I mean:

Dollar 60 min:

You can see that from the wave [ii] high at 84.557, to where I have marked wave [iii] at 82.085, could just be wave (i) of [iii], making this low at 80.085 wave (iii) of [iii]. If we end above 82.085 on this rally, that possibility would be excluded because this rally would be wave (iv) of [iii] under that possibility and wave (iv) mustn't end above the low of wave (i).

So, for this initial move up, we shouldn't fall below 80.425 before we move above the current day's high at 81.137. Assuming we complete 5 waves up from the low on my labelling, the critical level is then, of course 80.085 which must hold.

Once we move above 82.085 we ought to be safe from the possibility that the low at 80.085 was only wave (iii) of [iii].