Friday, 24 September 2010

21:16 BST - SPX End of Day Update

On the 3 bullish to bearish Options set out in Friday's end of day update, I'm looking for 5 waves up from the August low (the diagonal count I'd been following is no longer feasible as I had it labelled). Today's action confirmed that those 5 waves did not complete at the high of 1148.59 since we took that out and hit a new high at 1148.90 today.

The question now is whether that is the end of the rally from the August low which will mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 min charts in Friday's end of day update for context (the following charts are based on the bearish count shown in Option 1 in that update).

In last night's end of day update I identified the levels to watch for the bearish count that had us topping at 1148.59. Both of those levels (1136.77 and 1144.38) were exceeded today, so the bullish count which expected a high above 1148.59 became the main count and, as mentioned above, we duly took out the 1148.59 high.

So, here's the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

Here's a closer look at the action from the wave [1] of iii high:

Chart 2: SPX 1 min - 5 waves up from the August low close up: 

Obviously, labelling a wave that shoots straight up and then chops sideways has its difficulties. There are various ways to label it, as I've shown in the previous two intra day posts.

With all the sideways chop since the initial run up, this is another count I think works OK - an ending diagonal for wave [5]. It may be complete at today's high or that high may only be the 3rd wave of the diagonal - its difficult to tell, but a move below 1146.50 would suggest its complete, if it is a diagonal (if it s not complete, the 5th wave has to stay below 1149.46 on my reckoning since I would have the 5th wave starting at 1146.50 and the 3rd wave is 2.96 points). However, what I would really like to see is the low labelled as wave [4] get taken out in an impulsive 5 wave move.

So, after today's action, the main levels I'm watching are 1146.50, 1144.58 and 1122.79. Taking out the first one would suggest that the diagonal labelled is complete. Taking out the second one would preclude wave [5] subdividing, assuming that the wave [4] label is in the right place. Taking out the third would mean that wave v of (v) is complete assuming that the labelling shown on chart 1 is correct.

Have a great weekend!

20:08 BST - SPX Update: 5 waves up from August low complete?

If we take out the low at 1145.85 now, I'd be inclined to go with the labelling in this chart because taking out that low would invalidate the (1)-(2) of wave [5] that I mentioned in the last post, so we'd have wave [5] ending at 1148.81:

SPX 1 min - 5 waves up from August low complete?:

However, if we take out 1145.85, I then want to see a swift move to below the low at wave (W) which was labelled as wave [4] in the previous post and I want to see all of this happen in a 5 wave impulsive move.

However, if we can't take out 1145.85, I think we have to continue to expect further upside.

19:19 BST - SPX Update: 5 waves from August low complete?

We've taken out 1146.38, now I want to see the wave [4] low at 1144.58 taken out, otherwise, with a 5-3-5 looking wave down from the high, we could just be in wave (2) of [5] if today's high was wave (1) of [5]:

SPX 1 min - 5 waves from August low complete?:


18:59 BST - SPX Update - minor 2 top in?

Its possible that 1148.77 was the end of 5 waves up from where I now have wave [4] labelled and I can see a very small 5 waves down from there. (though you can't see it on the chart below). However, I think we need to take out 1146.38 which I have as wave (1) of [5] - until then, its possible that we're still only in wave (4) of [5]:

SPX 1 min - minor 2 top?:

If it is the top of 5 waves up from yesterday's low, we'll now have to wait and see if it was all of v of (v) or just the first wave.

17:32 BST - SPX Update - minor 2 complete with a slight truncation in wave v?

On this bullish count which yesterday was calling for another high above 1148.59, if we have completed 5 waves up from yesterday's low, the question now is whether its the whole of v of (v) or whether its just the first wave of v. If its all of it then SPX will have a slight truncation. The Dow took out its equivalent high, so this might be the kind of divergence that we often see at turning points:

SPX 1 min - minor 2 now complete with a slight truncation at 1147.62?:

Since the Dow exceeded its 21 September high, even if we don't take out 1148.59 to invalidate the [1]-[2] count, this count has to be the favoured one.

So far, we haven't seen any real sign of the market starting to decline here, so although I've labelled 5 waves up from yesterday's low as complete, there is clearly a risk that its not. We need a 5 wave decline as the first sign that a top may be in. Until then, we have to expect more upside. 

16:42 BST SPX Update: ending diagonal to complete the rally from yesterday's low?

On the bearish count that is really it - we have to drop now:

SPX 1 min - top in at 1148.59:

If we don't, that high at 1148.59 is likely to go and that will invalidate this count, and the bullish count could take us to the 1156 level (though it might not get there since the move up from yesterday's low could well be near completion, assuming its the whole of v of (v) of [c] and not just the first wave).

15:15 BST - SPX Update on the bullish and bearish counts

The bearish ones and twos down from the 1148.59 high has been invalidated. I have however got a [1]-[2] count that remains valid unless we take out 1148.59 - I've been trying to find a way to overcome the (1)-(4) overlap in wave [1] and think that the triangle shown in the chart below achieves that since the crucial point in determining overlap is where wave (4) ends - with the triangle for wave (4), it ends below the low of wave (1):

SPX 1 min - top in at 1148.59:

So, 1148.59 is the level to watch on this count.

However, the bullish count requiring one more high above 1148.59 (or 5 waves from the wave iv low) does seem  more likely, but you never know. Here's the bullish count:

SPX 1 min - one more high to come: