Friday, 5 November 2010

20:57 GMT - SPX End of Day Update

So, we have another candidate for a potential top for the rally from the August low. The problem remains, however, that there are various ways to interpret the action so while its possible to count a complete 5 wave rally from that low, its also possible that further highs need to be put in before it is over.

The context for the following short term charts can be found on the 60 min counts page.

Chart 1 shows the count I'm favouring at the moment. It assumes that we put in a top for the rally from the August low today or that we have one more rally to come, but once a top is in, that will result in significant downside (how much will depend on which Option from the 60 min counts page is playing out). 

The following chart is labelled as if Option 2 on the 60 min counts page is playing out so the top for the rally from the August low will be wave X and the decline that follows would be wave Y in an expanded flat type correction. However, it could equally be applied to Option 3 and what that means on Option 3 would depend on which of the three interpretations of that count is in operation (I've listed them on the 60 min counts page) :

Chart 1: SPX 1 min - bearish count:

Here's the more bullish count which has us looking for only the end of the 3rd wave in the 5 wave rally from the August low. Again, its not clear yet whether the 3rd wave, wave (iii), on the labelling in the chart below, has topped or whether a further rally is required.

The chart is labelled as if Option 3 on the 60 min counts page is playing out:

Chart 2: SPX 1 min - bullish count:

On both of the above charts, provided we stay above 1194.53, there is a risk of a further high being required to complete the wave v or wave (iii) labelled on these charts. Taking that high out without a new high above 1127.08 would void the alternate counts shown on the charts.

For the moment, the odds are favouring that the move from the 1127.08 high is a 4th wave on the alternate count shown on the above charts. However, until the high at 1127.08 gets taken out, its possible that it could be the first and second waves down in a larger decline.

Here's a close up of today's move. Ignore the label degrees - they're just for illustration, so the low labelled as possibly wave (iv) on Chart 3 below would be the 4th waves shown as an alternate count on Charts 1 and 2 above:

Chart 3: SPX 1 min - close up from 1227.08:

So, on the main labelling on Chart 3, there's not much room left to retain its validity if 1227.08 was a top in wave v or wave (iii) on Charts 1 and 2 above. So an immediate drop on Monday would really have to take place. If that doesn't happen, then the alternate that we only completed a 4th wave within wave v or (iii) today will be the count and, as you can see, it appears that we should be into the 3rd wave of the final rally for wave v or (iii) on Charts 1 and 2 above.

So, apart from the 1194.53 high mentioned above, the levels I'll be watching are 1127.80 (if we've topped in wave v on Chart 1 that should remain intact and if we've topped in wave (iii) on Chart 2, it should hold until we see a deeper retracement in wave (iv)) and 1220.40 (that must be taken out if we topped at 1127.08 although of course, it won't exclude all other options).

Have a great weekend!

15:56 GMT - SPX Update

With that push up from where I have the wave [4]  of v label on this chart, its even more possible than it was last night that this may be a complete 5 waves up from 1177.65:

SPX 1 min:

Wave [4] of v is still a little small in relation to wave [2] for my liking, but wave [5] would be quite well proportioned in relation to wave [1]. As I said last night, if we drop now and fail to stay above 1194.53, I'll go with this (though whether the top would be wave (iii) as shown on this chart or wave (v) as shown on Chart 1 in last night's update is still an open question).

While we stay above 1194.53, then the risk of further upside remains. Here's an update to the chart in my last post which shows that possibility, where today's high would be wave [3] rather than wave [5]:

SPX 1 min close up:

13:51 GMT - SPX Update

Still looking at this area as a possible top. Whether its wave (iii) or (v) will remain to be seen. If its a top, an impulsive decline is now needed. In the absence of that, the possibility of further upside remains:

SPX 1 min close up:

9:409 GMT - SPX : Counts from March 2009 and 60 min counts pages updated - despite yesterday's move, there is potentially considerable bearish risk to be aware of

With the move above the April highs yesterday, I've updated the Counts from March 2009 and the 60 min counts pages.

Although the trend remains up, which favours the bullish counts, there is a not insignificant risk that we may be at or near a potentially important top. 

You can see this on the chart of Option 2 on the 60 min counts page and the chart of the 5 wave impluse on the Counts from March 2009 page, which implies a move down in a Y wave which could take us to the 950  to 875 area. Also, on the bearish interpretation under Option 3 on the 60 min counts page (and as shown on the chart of the triple zig zag on the Counts from March 2009 page), we could be at or near the start of an even more significant decline.

However, as long as we're above 1039.70, the bullish counts are the most likely to be playing out (see the very bullish and moderately bullish interpretations  under Option 3 on the 60 min counts page).