Monday, 4 October 2010

21:17 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I've been  looking for the end of 5 waves up from the August low  to 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 counts page for context.

So far, the high at 1157.16 has held as a potential top based on the ending diagonal count.

You can see the bigger picture of that move up from the August low on the charts of Options 1 and 2 on the 60 min counts page.

Here's a closer look from the high of wave i within the ending diagonal at 1148.59:

Chart 1: SPX 1 min - 5 waves up from the August low complete at 1157.16:

One of the levels I wanted to see taken out (see Friday's end of day update) on this bearish count was 1132.09, because that would preclude a count that had wave v of the diagonal still in progress.  We took out that level today and also did it in what has the look of an impulse type wave. 

So, for the ending diagonal as I've labelled it, there doesn't appear to be room for another high. So, we've topped or some other count such as the short term bullish count is playing out.

Here's a closer look: 

Chart 2: SPX 1 min - 5 waves up from the August low complete at 1157.16 close up:

As mentioned in the previous post, I'm not sure at the moment whether we've actually completed an impulse down from today's high (for wave (1) of [3] on the bearish count) or whether we still have another low to come.  

If we're still in wave 4 of (1) as shown by the alternate labelling, we have to stay below the low of wave 1 of (1) at 1142.06. If we were to retrace that high, then I'd have to count wave (1) complete at 1131.87 and the rally from there as wave (2). We'd then have to watch the high at 1148.16, since wave (2) must not take that out.

Obviously, for this overall count to remain valid, we need to stay below the high at 1157.16.

Turning to the short term bullish count, you can see the bigger picture on the chart of  Option 3 on the 60 min counts page).

Here's a closer look  showing the ending diagonal for wave v of (iii) on that chart:  

Chart 3: SPX 1 min - 5 waves up from August low still in progress:

As you can see, an impulse move down from today's high could easily be part of a wave (iv) correction (I have it as wave [C] of a second zig zag for wave (iv)). So, we can't assume at this stage that an impulse wave down can only be bearish.

As I said in Friday's end of day update, the problem with this bullish count is that its not invalidated unless we take out 1065.21 in an assumed wave (iv). However, as explained in the pre-market post on Friday of this count, if I see a strong impulsive decline that takes out 1091.15, I'd really start to doubt this count.

For the moment, I've assumed a wave (iv) low at 1131.87, with a leading diagonal for the start of wave (v) up. However, as with the bearish count, the move up from the 1131.87 low could still be part of the 5 waves down from 1148.16, so a further low would be needed to complete wave [C] of y on this count. If we take out 1142.06, the I'd assume that wave (iv) completed ate 1131.87.

So, the levels I'm watching for now to the upside are 1142.06, 1148.16 and 1157.16. To the downside, I still want to see 1122.79 taken out in a continuing impulse, but 1091.15 may be more meaningful as an indication that the short term bullish count may not be playing out.

19:46 BST - SPX Update - 5 waves down from 1148.16 complete or one more low to come?

So far, we've only retraced about 23.6% of today's decline, so I'm wondering if we still have another down leg to go before we complete 5 waves down from today's high. Here's what I mean on a close up of the bearish count where a shallow retracement would count best as wave 4 of (1) down (see the alternate labelling) rather than as wave (2):

SPX 1 min - bearish count close up:


17:13 BST - SPX Update on the short term bullish count

On the short term bullish count, the triangle is out so we're left with a double zig zag for wave (iv):

SPX 1 min - bullish count close up:

Once this current move down bottoms, the high at 1148.16 is going to be important (that's where I have [B] of y on the above chart) - its the high of wave [2] in a potential impulse down on the bearish count, so has to hold if that count is playing out (see the previous post). If we take out that high, this short term bullish count is going to become more likely.

17:02 BST - SPX Update on the bearish count

I've re-jigged the labels on the bearish count to show a today's high as wave [2] in a [1]-[2] dwon from 1157.16 instead of wave (2) in a [1]-[2]-(1)-(2). This means we're currently in wave (1) down now:

SPX 1 min - bearish count close up:

15:37 BST - SPX Update on the bearish and bullish counts

Here's the bearish count - the drop from today's high does have a 5 wave look about it, so we may have seen the c wave of Y of (2) truncate. Beware, its possible we're still in wave (2) or even [2], so I'm watching the highs where I've placed those wave labels, 1148.16 and 1149.59:

SPX 1 min - bearish count close up:

Here's the short term bullish count - the triangle I've outlined will be invalidated if we take out 1136.08, but that still leaves the potential zig zag which I have as the main labelling. Either could be playing out at this stage:

SPX 1 min - short term bullish count close up:

Today's low could be the e wave of the triangle, but the move up from there doesn't look impulsive, so we may well have another drop below today's high to come to complete it.

For the bigger picture on these counts, see the 60 min counts page. The bearish count is shown under Options 1 and 2, while the bullish count is shown under Option 3.