Friday, 15 October 2010

21:36 BST - SPX End of Day Update

The counts shown in yesterday's end of day update anticipated that we would see some upside today, which would be the start of the next leg up on the bullish count or a corrective 2nd wave on the bearish count.

Today's action took us up, down and then sideways, but up  a little overall. So, the action hasn't doesn't anything to tell us whether we are in the bullish or bearish count.

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 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:

Here, I'm assuming we've started wave [3] of v up. I've put us in wave (3) of [3], but it may be that wave (2) is still playing out, so we have some further downside to come. That's fine as long as we stay above 1155.71 in wave (2) of [3]. If we were to take out that low,  it would look like the bearish count is playing out, making 1184.38 the end of the rally from the August low. 

As I showed earlier, there is another bullish count that may be playing out and which would have less upside than the one shown above. You can see that count by clicking here.

I think I'm starting to prefer that count over the one shown in Chart 1 above simply because its more likely to produce a wave (v) that's in proportion to wave (i). As mentioned in that earlier post, because wave iii is shorter than wave i on this alternate count, wave v would be limited by the size of wave iii, which is 28.67 points. So, if wave iv ended at the low of 1171.17, for example, wave v couldn't exceed 1199.84. This count would be invalidated if we slip below 1163.87 (the wave i high) before we make a new high.

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:

As you can see, I've shown a [1]-[2]-(1)-(2) down from the high at 1184.38. It may be that we're actually still in wave [2], and this will certainly be the count to follow if we take out 1181.20. In that event, wave [2] would have to stay below 1184.38 in order to keep the bear count intact. If that's taken out, I'll turn my attention to the bullish count. 

So, following today's action the levels I'm watching are: 1184.38 (to keep the bear count alive), 1163.87 (to keep the alternate bullish count alive) and 1155.71 (to keep the bullish count shown in Chart 1 above alive). 

Have a great weekend!

19:42 BST - SPX Update: alternate 60 min bullish count which implies less upside than the main bullish count

Here's an alternative on the bullish count shown on Chart 3 on the 60 min counts page:

SPX 60 min - Option 3:

This count makes the 1184.38 high wave iii of (v) and the action since would be wave iv, possibly as a triangle. It would limit the size of wave v of (v) to 28.67 points, which is the length of wave iii, since wave iii is shorter than wave i.

This count would be invalidated if we take out the wave i high in an assumed wave iv. That high is 1163.87.

19:02 BST - SPX Update - Various possibilities on both bullish and bearish counts

What a mess! A couple of possibilities on both bullish and bearish counts:

SPX 1 min - bullish count:

Perhaps we've started wave (3) up or wave X of (2) may have formed a triangle and we may have another drop to come in wave (2) before we start wave (3) up.

We have to stay above 1155.71 for this count to remain valid.

SPX 1 min - bearish count:

We may have started wave [3] down. If so, we have to stay below 1181.20. Alternatively, we may still be in wave [2] - in that case, we have to stay below 1184.38. 

Taking out today's low would help confidence in this count, but while we remain above 1155.71, the bullish count remains.

15:36 BST - SPX Update on the bullish and bearish counts

Despite the decline today, the bullish count remains intact, though I find it difficult to describe today's action as bullish. Still, here is what I think may be happening on this count:
SPX 1 min - bullish count:
Until we take out 1155.71, this remains on the table. It has room to drop further, therefore, but may be complete at today's low.
Here's the bearish count:

SPX 1 min - bearish count:
It does look like a nice impulse in the making. I've labelled a partially complete impulse for wave (1) of [3], so a new low below 1167.12 may result in a bounce in wave [2], but I'll have to see what it looks like if it happens. It may be that we've already completed 5 waves down - its difficult to tell. I'll just have to watch the how we retrace.