Friday, 10 September 2010

19:58 BST - SPX Update on the ending diagonal from 1040.88

Could this be it for the ending diagonal?

SPX 1 min - ending diagonal complete - take two:

Taking out the low at 1105.15 would greatly increase the odds that this ending diagonal is over, but the low I remain focused on is 1101.53. As explained in the earlier update showing the alternate ending diagonal count  (click here), I think until then, that 5th wave ending diagonal count gives rise to the risk of continuing upside.

19:04 BST - SPX update on the bearish count

The count that had us complete an ending diagonal at today's high (see the earlier post here) is looking a bit ropey at the moment. Here's how I'm counting it currently, waves 1 and 2 down (this will be invalidated if we take out today's high):

SPX 1 min - ending diagonal complete at 1110.27:

However, it could just as easily be  that we haven't completed the diagonal and that its forming a second zig zag within wave (5) of the diagonal (remember that we have to stay below 1120.53 if there is more upside in the diagonal).

Alternatively, the ending diagonal 5th wave shown in the last update may be the one that's playing out, in which case, the upside is potentially greater and there is more risk of the bearish count being invalidated (with a move above 1129.24). However, if it is playing out, we'll just have to see how it develops.

I've mentioned the 1101.53 level in my previous posts today - I think that until we take that out, the bearish count is prone to further upside.

17:38 BST - SPX Update: Alternative to the complete ending diagonal

On the bullish counts (see the update on the bullish counts posted yesterday), although the move up from 1040.88 can be counted as a diagonal as I've shown on the bearish counts, it would be a leading diagonal.

However, there's an alternative which could also apply to the [C] wave on the bearish count, which has us currently in an ending diagonal 5th wave in the 5 wave move off 1040.88. Here it is shown on the count that has us in a zig zag up from 1010.91 (see chart 1 in the update referred to above):

SPX 1 min - ending diagonal 5th wave still in progress:

I've labelled it as if wave (3) is still in progress, but  it may not be. Either way, if we take out the low at 1101.53, this diagonal is ruled out.

16:58 BST - SPX Update on the bearish count

We could have a top for the bearish count, but I think we need to see the wave (4) low get taken out. That's down at 1101.53:

SPX 1 min - Ending diagonal [C] of ii complete?

15:39 BST - SPX Update on the bearish count

Well, that didn't take long! Now, if this count is right, we have to stay below 1120.53 in this wave (5):

SPX 1 min - ending diagonal for wave [C] of ii: 

15:27 BST - SPX Update on the bearish count

This is how I'm counting the move from the 1109.92 high which I labelled as the top of wave ii on the bearish count (see yesterday's end of day update):

SPX 1 min close up from 1109.92 high:

The alternative labelling on this chart relates to the bullish counts which you can see in the update I posted on those counts yesterday.

On the bearish counts, there's not a great deal of room left for this count - its invalidated above 1109.92.

If that high is taken out, it would mean that wave ii is continuing higher, but as I said in yesterday's end of day update, there's not much room for a larger impulse wave up before this [i]-[ii]-i-ii count gets invalidated. So, for the bearish count, I'd have to look at wave [C] as possibly forming an ending diagonal as I've sketched in on the following chart with the orange lines:

SPX 1 min - ending diagonal for [C] of ii:

If its an ending diaginal, I'd have us in wave (5) and as you can see from the note on the chart, that wave must stay below 1120.53 in order to comply with the rules. It also has to take out the wave (3) high at 1110.27.