Thursday, 4 November 2010

20:38 GMT - SPX End of Day Update

The most bearish of the bigger picture Options, Option 1 on the 60 min counts page, was invalidated today with the move above 1219.80. That leaves Options 2 and 3 still open. Option 2 is bearish near term once we see an end to the rally from the August low. Option 3 is potentially very bullish, but may now be potentially very bearish if today's rally marks the whole of wave C on that count. You can see the possiblities under Option 3 as well as the bigger picture for the following charts on the 60 min counts page.

Whichever Option is playing out, I'm still looking for the end of the rally from the August low. I think it remains open as to whether we're in wave (v) or wave (iii) of that rally. I've separated the two out  for clarity. 

Here's the chart showing us in wave (v):

Chart 1: SPX 1 min - wave (v) of the rally from the August low:

Its possible that we've got a top in at today's high, but its also possible that today's high is only wave iii of (v) and we can expect a larger retracement in wave iv in terms of time, as well as price, next.

Here's a close up chart showing that possibility (its labelled as if we're in wave (iii)):

Chart 2: SPX 1 min close up:

Note the possibility on this chart that wave iv (or (iv) on the count shown on Chart 1 above) was actually at the low of 1183.56 so the 5 waves up that I've labelled from there (up to the red [3]) may be the end of wave v or (v). I'll be watching how the next pullback behaves for clues as to whether this might be the case.

If we do still have wave [4] or wave iv to come, then it has to stay above the wave [1] or i high at 1194.53. If it doesn't then the alternative I've labelled on Chart 2 may well be playing out. 

Chart 3: SPX 1 min - wave (iii) of the rally from the August low:

This is obviously more bullish than the count in Chart 1 above, although once wave (iii) is over, we should see a decent retracement in wave (iv). A 23.6% retracement would take us to about 1178 while a 38.2% retracement would be at about 1152.

So, for the moment, I think the main level to watch is 1194.53. If the next retracement stays above that level then its likely we're going to see a further high to complete wave (v) or (iii). If it moves below that level, it increases the odds that we may have seen a top, either to wave (v) or (iii) for the rally from the August low.

17:52 GMT - SPX Update

Here's the 1 min chart I posted earlier, which I've updated:

SPX 1 min:

We could well have seen the end of wave [3] of v, with a pullback in wave [4] now in progress. If so, the 23.6% retracement is at about 1209 and the 38.2% retracement is at about 1204, so those might be levels to watch for a potential low for wave [4].

If this is wave [4] and the labelling as shown is correct, we have to stay above the wave [1] high at 1194.53 in wave [4]. If we take that out, then the other possibility I mentioned in my earlier post, that wave iv should actually be at the 1183.56 low, may well be playing out. That could mean that wave (iii) or (v) has topped. If its the latter, that's likely to result in quite a significant decline.

Its also possible that we're still working on wave (5) of [3] as shown on this close up chart:

SPX 1 min - close up:

If we take out the low at 1214.05, that will suggest that wave [3] topped as shown on the first chart above (though it won't rule out the possibility that we're still in wave (4) of [3].

So, lots of possibilities, but for the moment, the focus still needs to be on the upside until such time as we see something clearly impulsive to the downside.

14:16 GMT - SPX Update

Today's move means that Option 1 on the 60 min counts page should now be disregarded since all other indices have exceeded their April highs. So that leaves Options 2 and 3 on the bigger picture.

I'm still looking for a top to the rally from the August low. With the potential ending diagonal counts posted yesterday both invalidated, that leaves the following which puts wave (iv) back to where I had it previously:

SPX 60 min:

The labelling on the above chart is what I've been referring to as the less bullish option because it required only one more move up to complete the rally from the August low. The more bullish option has looking for the end of  wave (iii) rather than wave (v) of the rally. 

Here's a closer look at the count, with the more bullish option shown as the main labelling:

SPX 1 min - close up:

It looks like wave [3] could do with another push up to complete.

Note that wave iv or (iv) could very easily be placed under the low at 1183.56, in which case, if there is another push up to come, it may well complete wave (iii) or (v). I'll be looking at the character of the next decline once it appears that we've got 5 waves up from 1183.56 to try to determine if it may mark a top.