Thursday, 14 October 2010

21:07 BST - SPX End of Day Update

The counts shown in yesterday's end of day update anticipated a continuation of the decline from 1184.38 that had started in the latter part of yesterday's session, whether on the bullish or bearish count. On the bullish count it was wave [4] of v and on the bearish count it was part of an impulse wave down.

Today's action fulfilled that expectation and, in the process, the main bullish count was invalidated with the move below 1168.68. However, the alternative bullish count that I had mentioned remains.

The following charts are close ups of the action from the 1131.87 low. You can see the larger context of the following charts on the 60 min counts page.

Here's the surviving bullish count which I've labelled as if Option 3 on the 60 min counts page is playing out:

Chart 1: SPX 1 min - bullish count:

On this labelling, taking out 1155.71 would invalidate the count, since wave (2) of [3] can't drop below that low. If we were to take out that low,  the bearish count would become the focus, making 1184.38 the end of the rally from the August low. 

Of course, what that means depends on which Option shown on the 60 min counts page is playing out, because it could just be a temporary top prior to more significant upside.

Here's the bearish count which is labelled as if Option 1 on the 60 min counts page is playing out:

Chart 2 : SPX 1 min - ending diagonal from the August low complete at 1184.38:

I've switched back to the impulse wave off the high at 1184.38 since we didn't see a retracement deep enough to be considered as wave [2] following the diagonal I had labelled earlier.

As you can see, I've shown a complete wave [1] down, meaning we'd now be in wave [2] up. A likely retracement level might be the 61.8% area at about 1178, but watch also the 78.6% level at about 1180 and the 50% level at about 1175.

The critical level for this count is the high at 1184.38. If we take that out then I'd have to assume that the bullish count is playing out.

So, I'm watching two levels after today's action: 1184.38 and 1155.71. Taking out the former eliminates the bearish count while taking out the latter eliminates the bullish count.

19:07 BST - SPX Update : main bullish count invalidated, but the alternative stands. Diagonal from the high on the bearish count?

The main bullish count shown in the last post has been invalidated by the move below 1168.68. That focuses attention on the more bullish count I've mentioned but not previously charted in detail (I've been describing it in end of day updates). You can see it on Chart 3 on the 60 min counts page and here's a close up from the wave (iv) low:

SPX 1 min - bullish count:

It shows wave (v) subdividing. This labelling will be invalidated if we take out 1155.71.

On the bearish count, I'm starting to favour the diagonal down from the high rather than a straight impulse, though it still could be either. I've labelled a complete diagonal on the following chart:

SPX 1 min - bearish count:

If we continue to fall without a meaningful retracement for what would be wave [2] on the diagonal count, the impulse wave down will start to look better again. Obviously, for this bearish count, the high at 1184.38 has to remain intact.

17:53 BST - SPX Update on the bullish and bearish counts

On the bullish count posted earlier, the wave [4] drop is getting a bit deep, but the count remains valid so far. It now looks better as a (W)-(X)-(Y):

SPX 1 min - bullish count:

Remember, this count is invalidated below 1168.68 (in which case, my attention will turn to the more bullish count referred to over the last several days - see yesterday's end of day update and Chart 3 on the 60 min counts page).

On the bearish count, we could be getting an extending wave (5) or a diagonal (as to which, see the blue lines I've drawn in):

Its also possible, as mentioned in the last post, that where I have wave (3) of [1] is actually the whole of [1] down and we're now in wave [3] down. If this decline starts to extend, I'll certainly be thinking more closely about that possibility.

15:48 BST - SPX Update on the bullish and bearish counts

Here's how what I'm seeing at the moment:

First, the bullish count: looks like a possible complete wave [4] of v:
SPX 1 min - bullish count:

It would be fine for wave [4] to drop more, but it has to stay above 1168.68 for this count to remain valid.

Second, the bearish count: a possible (1)-(2)-(3) down so far:

This will be invalidated if wave (4) ends above the wave (1) low at 1179.46. In that case, we might then have a (1)-(2)-1-2 down, but I wouldn't place too much confidence in that. However, if that were the count, wave 2 would have to stay below 1182.47 for the count to remain valid. 

If we take that out, its possible that we could say that today's low was wave (5) and, therefore, wave [1] down and if we don't take out the high at 1184.38, that would be how I'd count it. At the moment however, the close up of the move down from 1182.47 to 1174.04 (which would be wave (3) on this way of counting the move) isn't the best looking 5 waves I've seen.