Friday, 3 September 2010

21:41 BST - SPX End of Day Update

For both bullish and bearish counts, I was looking for 5 waves up from the low at 1040.88 which occurred on 31 August. 

If you look at the update I posted today on the bullish counts (you can read it by clicking here), you'll see that for the count shown in chart 1 in that update, it would be wave iii of (i) of [c] in a zig zag. For the count shown in charts 2, it would be wave (i) of [iii] up and for the count shown in chart 3, it would be wave [i] of C up.

On the bearish counts, 5 waves up from 1040.88 would complete a 2nd wave correction in an overall downtrend.

The counts I show below on the charts of the bearish counts for a 5 wave move up from 1040.88 apply also to the bullish counts.

For the bigger picture on those bullish counts and the bearish counts set out below, please refer to the 60 min counts page.

Today's action eliminated one more bearish count, leaving the following ones intact: 

Chart 1: SPX 1 min -  i-ii down from 1129.24:

On this count, we're retracing the decline from 1129.24. So far, we've retraced just over 70.7% of that decline. If there is further to go, the 78.6% at about 1110 may be a target.

This count would be invalidated if we take out the high at 1129.24.

Here's a closer look at today's action showing the move off the 1039.70 low I have as wave i:

Chart 2: SPX 1 min from the 1039.70 low:

It looks like we are about to complete those 5 waves up from 1040.88.

Here's a closer look, zooming in on the move from today's high at 1105.10:

Chart 3: SPX 1 min - from the 1105.10 high:

On this chart, the count for a high above 1105.10 is shown as the alternative on the chart I was using in earlier posts to show a possible top at 1105.10, but that seems unlikely with the move up we saw in the last few minutes of trading.

Assuming that we're in the last leg up to complete wave [C] of ii, you'll see from the note that wave v of 5 of (5) of [C] may be in the process of extending. 

The other possibility is that it may be forming an ending diagonal. If so, and assuming we started the 3rd wave of the diagonal at 1102.40, that 3rd wave must stay below 1106.24 otherwise the 3rd wave will be longer than the 1st, in breach of the rules for contracting diagonals. It would then become more likely that wave v of 5 is extending.

Once we complete wave ii, we would expect to see strong implusive moves to the downside - behaviour consistent with a 3rd wave decline. Anything less would have to be taken as a warning that this bearish count is not playing out and that the decline is simply part of a corrective move within one of the bullish counts.

The other bearish count that has survived this week has wave i down from 1129.24 complete at the low of 1069.49 and places us currently in wave ii which is taking the form of an expanded flat. Here's the chart:

Chart 4: SPX 1 min - wave i at 1069.49, wave ii expanded flat:

As I've said in previous end of day updates, I don't particularly like this count, but its valid and if its correctly labelled, we need to see 5 waves up from the low marked [B] at 1039.70. As you can see from the chart,  we may be on the verge of completing this too.

The 61.8% retracement level for this count is at about 1106. The count shown in chart 3 above for the move up from 1094.99 would also apply here and if the final leg is taking the form of an ending diagonal, the 1106 level may well be met. If the last leg up is extending, it feasible that the 78.6% level at about 1116 could be reached.

This count would be invalidated if we exceed the high at 1129.24.

So,with another bearish count  invalidated today, the levels to watch are now as follows:

1) for both remaining bearish counts, we have to stay below the high at 1129.24;

2) if we take out 1129.14, that will eliminate those two remaining bearish counts for the move down from that high and will focus attention on the bullish counts. The first bullish count shown in the update posted today  is bearish once wave [c] of 2 completes. If that count is in play, we would need to see impulsive downside action once wave [c] and 2 end, otherwise, focus will have to switch to the bullish counts under Option 4.

Have a great weekend!

20:04 BST - SPX Update: 1 min - one more high, or did we top at 1105.10 on the bearish counts?

In my last post I speculated whether we had completed 5 waves up from 1040.88 at 1105.10, which, on the bearish counts, should mark the end of wave ii. Here's an update on that possibility, but also showing how we could count the move up from 1094.99 for that last wave up that was expected:

SPX 1 min - from 1105.10:

You can see that on the basis of the alternative labels for one more high to complete wave ii, we have to stay above the high at 1098.95 if we are currently in wave iv of 5 of (5) of [C]. If we take that out before making a new high, then it increases the chances that the top for wave ii on the bearish counts was at 1105.10.

17:40 BST - SPX Update: 1 min chart from today's high

You can see from my earlier post on the bearish count that the expectation is that there is another leg up to come to complete this wave ii rally. As mentioned, there is a possibility that we completed it at today's high as the alternate labels on the chart in that post suggest. Given the way we came down from today's high, it is tempting to label the end of wave ii at 1105.10 as shown in this chart:

SPX 1 min - from the high at 1105.10:

The move down does look impulsive, it has to be said. Furthermore, the action since the low at 1094.99 looks corrective. Its certainly worth considering. Taking out today's high would, obviously, invalidate this.

16:39 BST - SPX Update: Update on the bullish counts

Here's an update on the bullish counts I've been following (last update can be read here). For the context of these counts, please see the 60 min counts page.

Chart 1 - 60 min - single zig zag from 1010.91 still in progress:

This count currently has us in wave (i) of [c] of minor 2. 

Here's a close up of this count, picking up the above chart from the low at 1039.83 on 25 August:

SPX 1 min - from 1039.83 low: 

It looks like we need another up leg to complete wave iii of (i) of [c], but its quite possible that it topped at today's current high. If  so, we're in wave iv of (i) of [c] now and we have to stay above the wave i high at 1065.21. Taking that out without a new high above 1105.10 will invalidate the labelled count. 

However, it may just mean that we saw the wave (i) high at 1105.10 and does not invalidate the count from the wave [b] low altogether. The level at which this count is invalidated if the assumption is that we've started wave [c] up, is 1039.70.

If this count is playing out and wave [c] is to equal wave [a], a target for the end of wave [c] would be about 1158.

Chart 2: 60 min first bullish count under Option 4 - impulse up from 1010.91:

Chart 3: 60 min - second bullish count under Option 4 - leading diagonal up from 1010.91:

The counts shown on charts 2 and 3 above now need us to stay above 1040.88 for the count as labelled to remain valid (of course, it possible that wave [ii] bottomed at 1039.70, not 1040.88, in which case, that would be the relevant level to watch).

15:35 BST - SPX Update: 1 min Possible count to a top if we take out 1087.11

If this is wave 4 of (5) of [C] we have to stay above the wave 1 of (5) high at 1087.11. If we don't before making a new high, then its quite possible we may have seen the end of this up move:

SPX 1 min from 25 August low:

14:36 BST - SPX Update: 1 min: One more bearish count eliminated, 2 left plus three bullish counts

The i-ii-[1]-[2] count has been invalidated with the rise above the 1100.14 high, so from chart 1 in yesterday's end of day update, that leaves the i-ii count from the 1129.24 high:

SPX 1 min - i-ii down from 1129.24 high:

The next retracement level to watch, if price doesn't turn down from here is 1110 which is the 78.6% retracement level.

This count, like the expanded flat wave ii count shown in chart 3 in the above update will be invalidate above 1129.24. Above that level, the bullish counts (see the last update on these by clicking here) will come into play.