Friday, 13 August 2010

22:37 BST - Dollar Page Updated

Obviously, I didn't spend all of my time this afternoon making a silly list. To prove it, I've posted an update to the dollar page.

There are encouraging signs that we've started minor wave 3 up, but I've listed some bearish possibilities that could delay it or, worse, could mean its not happening (after reading the update, you might conclude that I did  spend all my time making silly lists).

21:12 BST - SPX Update

With today's action not really having changed the picture on the 10 min charts a great deal, I won't post those charts tonight. I'll just post the charts showing the move since the 1129.24 high which I've posted during the course of today.

If you want to see the slightly bigger picture, have a look at the 10 min charts in last night's update (and for the even bigger picture, click on the buttons in the menu above. The 60 min counts page describes the Options referred to below).

The count from the 1129.24 high is the same for all of the Options I'm following:

SPX 1 min - from the high at 1129.24:

The main count labelled suggests that we've started wave [5] down (the degrees of the labels on this chart relate to the count shown under Option 2, by the way). For this to remain valid we need to stay below the high of wave [4] at 1086.72.

Wave [4] is still labelled with a question mark at the moment since its not certain that we have ended wave [4]. It could be forming a larger correction which will push us up to the 23.6% or 38.2% retracement levels between about 1108 and 1096. Or, as the dotted green lines suggest, we might be forming a triangle with the low at 1079.10 being the (D) wave.

At the moment, based on the character of the move since the 1176.69 low, I'd rate the possibility that that low was wave [5] and wave i down as not very high. It could change with one big impulsive move up, but as things stand, its the least likely of the alternatives mentioned, in my view.

Here's a closer look at what we've seen today:

SPX 1 min - close up:

I've changed the alternative count from earlier to show it as a possible (W)-(X)-(Y) instead of (A)-(B)-(C). The significance is that the (Y) wave will only be 3 waves rather than the 5 that would be required if it is a (C) wave. Its possible that it will end up as a 5 wave rally from the low currently labelled as wave (1) of [5] down, but looking at the correction so far, a 3 wave move off that low to complete wave [4] looks more in keeping. However, either would be acceptable as long as wave [4] does not end above the low of wave [1] at 1111.58.

So, the invalidation point for the count, if there is more upside to come in wave [4] remains as yesterday, 1111.58. If that gets taken out in what we're currently assuming is a wave [4] correction,  an alternative that I've mentioned before but which is not on the chart, is that the low at 1176.69 was wave (1) of [3]. That possibility would be invalidated if we took out the start of what would be wave (1), at 1127.16.

In that case,  it may well be that the count mentioned on the first chart above is playing out, with waves [5] and i having bottomed at the 1176.69 low.

If that alternate is playing out, we'd need to stay below the high at 1129.24 for it to remain valid. If that high is taken out, then obviously, something more bullish is going on. Possibly, that may be the bullish alternates  under Option 4, which you can see charts for in last night's update - both remain valid at this point. Or, any of the Options can accommodate further upside, even above 1131.23, as you can see from the commentary on each Option on the 60 min counts page.

So, those are the levels to continue to watch for signs of cracks in the bearish count. 

For signs that the bearish count may be playing out, we need to make 5 waves down from the 1129.24 high (I'm assuming that we haven't already done so). Taking out the low at 1056.88 would also be favourable for the bear case, but ultimately, we want to see the low at 1010.91 get taken out. As explained last night, this wouldn't exclude any further upside or even new highs in the forseeable future.  So it wouldn't be proof that the bear case is playing out, but without it, there is no bear case.

Have a great weekend!

19:14 BST- PPT Friday Checklist

Reasons to send the market down:

1) moving average resistance;

2) ichimoku cloud resistance;

3) pitchfork resistance;

4) incomplete elliott wave count.

Reasons to pump the market up:

1) to piss off the bears for another weekend?

Sorry  - did I mention I was bored?

18:56 BST - SPX Update: 1 min chart

If this corrective count is correct there shouldn't be much more upside to go - partly because there isn't much room left if this count is to remain valid (I've shown it as needing one more push up, but its quite possible its already complete:

SPX 1 min close up:

If the 1086.72 high gets taken out, then I'll look to the alternative marked on the chart as possibly playing out.

18:32 BST - ES Update: 60 min chart

Since its Friday and I'm bored with this price action, here's an update of the 60 min ES chart I posted before the open, showing the continuing struggle going on against fork, cloud and moving average resistance:

ES 60 min:

It all suggests we should move down again, but the market is always ready to surprise.

18:13 BST - SPX Update: 60 min chart

On the 60 min chart, there are signs of the indicators turning up, but they're not necessarily telling us we should be long. They're moves seem to be consistent with a possible 4th wave still in progress. The MACD histogram in particular suggests we should be due another leg down to get a higher trough low than the last trough low. That would be the signature of a 5th wave, at least that's the theory:

SPX 60 min chart:

So, the downtrend has lost some momentum, but there's no real signal to buy just yet. Well, that's my interpretation at the moment, but I'm keeping my eye on it for developments that might suggest rather more bullishness may be in store.

17:49 BST - SPX Update: 1 min chart

The count for the start of wave (5) down that I posted earlier is looking a bit unlikely at the moment without any impulsive follow through down. However, wave [5] may still be underway with this count:

SPX 1 min close up:

It shows a leading diagonal wave (1) and the rally from today's low is wave (2). The high at 1086.72 remains the invalidation point for this count.

You'll see on the chart a possible alternative where the leading diagonal is, in fact, an ending diagonal wave C within wave (B) of an on-going wave [4] correction. If that's correct, maybe we will get nearer to the 23.6% or 38.2% retracement levels at 1088 and 1095-ish.

At the moment, it doesn't look like the alternative that we had a wave [5] and i bottom yesterday (see note on the first chart in the post to which I linked above) is playing out since we haven't seen any action consistent with a 2nd wave retracement - yet. But there's still time, of course, so I wouldn't rule it out.

15:49 BST - SPX Update - 5 min ptichforks

Here's some more pitchfork action. If this stuff doesn't interest you, don't worry - just click the link at the top of this blog that says "Next blog". I have no idea where it'll take you, but I hope you'll be very happy!

Price is trying to stay within the new upward green fork, but is getting resistance from the upper lines of the downward pink and red forks and the lower line of the blue fork that it broke below yesterday:

SPX 5 min Pitchforks:

If we need a wave [5] down to complete this move off the 1129.24 high (see my earlier post), we're going to break down again below that green fork and probably head towards the median line of the pink one. If its a wave [5], we may not get all the way there, which would be a potential sign of an end of wave [5] and i and the start of a wave ii up - obviously a stronger sign if we see 5 waves down from today's high also.

15:25 BST - SPX Update: 1 min charts

Its possible we just saw a high for wave (2) of [5] if the main count labelled is correct:

SPX 1 min from 1129.24:

Here's a close up:

SPX 1 min close up:

The high at 1086.72 has to hold. If it doesn't, we may be in the (W)-(X)-(Y) suggested or the more bullish alternative of a wave [5] and i low yesterday (or something even more bullish).

13:20 BST - Dollar update

I'm not sure if this count is right, but it behaved like a 4th wave would be expected to behave, so I'll stick with it for the moment:

Dollar 20 min:

If its correct, we should be starting wave v up. Of course, its possible that the 3 wave move labelled iv is only part of an expanded flat correction being formed, in which case we might come right back down again. Wave iv only retraced 23.6% of wave ii, so this can't be ruled out.

Its also possible that the high labelled iii is actually wave i or wave (i), in which case, we probably would see an expanded flat for wave ii or (ii), with the [C] or c wave likely to take out the low that I've labelled iv on the above chart.

We've just ticked above the high of wave iii, with what what could be 5 a  wave move,  so if the chart is correctly labelled, in elliott wave terms, we've done enough to complete wave v, so this rally may be short-lived.  

However, if we're going to get a decent sized wave v, we might expect at least a .618 extension of wave i, which would take it to about 83.076., but if the rally from the low labelled iv is only wave  [1] of 5, we're probably headed higher than that, maybe to where [5] would equal [1] at about 83.630.

For the moment, I have my eye on that wave iv low at 82.182. Taking it out might suggest more downside before we can head higher.

11:31 BST - ES Update: A confluence of resistance

Here's something you might find interesting (or not!). Some interaction between pitchforks, conventional technical analysis of lines of resistance and moving averages and the ichimoku cloud resistance on a 60 min chart of the emini S&P futures:

ES 60 min:

The red downard fork has been on the chart since 10 August. It was only speculative because the lower line isn't drawn off a pivot, I just drew it so that the median line cut through the price action that preceded the pivot which formed the start of the upperline of the fork.

It wasn't perfect in containing price, but it did a reasonable job. The median line did provide resistance yesterday for a while, and when price broke above it, it came back briefly to test that median line.

As we would expect when price gets above the median line of a fork, it went up to the upper line and broke through it this morning.

You can see that an upward green fork was drawn from pivots that occurred yesterday and price seemed to be following the median line of thaat fork up.

However, it hit an area which represents a confluence of resistance as identified by various groups of traders - those using pitchforks, (price was re-testing the median line of the green fork having backed off it earlier) those using ichimoku clouds (price was hitting the underside of the cloud) and those using conventional technical analysis of resistance lines (see the blue horizontal line) and moving averages (price came to the 50ma).

With price hitting an area of resistance being looked at by all those groups of traders, you can see the reaction that just occurred.

I've now drawn in another fork (purple) using the pivot high we hit today. If this down move is to continue, we should see price move down to the median line and, possibly below (like it did in the red fork). Let's see.