21:16 GMT - SPX End of Day Update

While the high at 1227.08 remains intact, its still possible that it marks the end of the rally from the August low. However, it has to be said that the action since that high doesn't inspire confidence in such a count and the counts which entail further highs to come remain higher odds at this stage.

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

Chart 1 shows the count  which assumes that we put in a top for the rally from the August low at 1227.08 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. 

Chart 1 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:

Chart 2 below shows the more bullish count and is labelled as if Option 3 is playing out. It has us looking for only the end of the 3rd wave in a 5 wave rally from the August low. Again, its not clear yet whether the 3rd wave, wave (iii), on the labelling on Chart 2 below, has topped or whether a further rally is required as suggested by the alternate labelling.

Chart 2: SPX 1 min - bullish count:

On the labelling on both of the above charts, while we're above 1194.53, the odds favour  a further high being required to complete the wave v or wave (iii) labelled on those charts. Taking out 1194.53 without a new high above 1127.08 would void the alternate counts shown. It would then be a question of whether we completed 5 waves from the August low at 1127.08 (as shown in Chart 1) or whether that was only the end of a 3rd wave (as shown in Chart 2).

For the moment, the price action since the 1227.08 high suggests its more likely that we're in or we completed 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  series of ones and twos down as shown as the main labelling on Chart 3 below (once again, ignore the degrees I've used for the main labels - they're just for illustration):

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

On the main labelling on Chart 3, I've labelled a set of ones and twos down on the assumption that 1227.08 was a top in wave v or wave (iii) on Charts 1 and 2 above. However, as you can see,  the alternate, that we only completed (or are still in) a 4th wave within wave v or (iii) today is very much a viable count. As mentioned in previous updates and above, its to be preferred while we're above 1194.53.

For the bear count now to gain credibility, we need to stay below 1224.57, even though taking it out doesn't invalidate the labelling on Chart 3 above and only taking out 1227.08 will mean that a top was not in at that high.

We also need to take out the low labelled [1] on Chart 3 above at 1218.21 and do so in a very impulsive manner. Taking out that low will keep the bear count on the table but won't mean that its the count that is playing out.

Going on to take out 1194.53 without a new high above 1127.08, will exclude the alternate count shown on the above charts. However, the possibility that 1227.08 was only a 3rd wave high in a 5 wave rally from the August low, as shown on Chart 2 above, will remain. It wouldn't become invalid unless we we're to drop below 1065.21 in an assumed wave (iv). With that invalidation point being so far below the market, we'd just  have to monitor wave behaviour if we do drop below 1194.53, to try to determine if we topped at 1227.08 (Chart 1) or if a further high is still likely once we've seen a larger degree 4th wave correction (Chart 2).

16:17 GMT - SPX Update - close up

Here's an update of the close up chart posted as Chart 3 in Friday's end of day update:

SPX 1 min close up:

The main labelling is from the first chart in my last post. From the high at 1227.08 you have to ignore the degree labels I've used for the main count - I've upped them by a few degrees so that I can label the detail without going too far below miniscule degree. The i and ii on this chart would be the (1) and (2) on the first chart in my last post.

The alternative labelling is the alternate count shown on both charts in my last post which means a further high even on the most bearish count.

For the main (bearish) labelling, I don't really want to see the wave [2] high at 1221.62 get taken out, though it wouldn't be fatal to the bear count - we could just still be in wave [2] or wave ii (ie (2) on the first chart in my last post).

The invalidation point for the bear count remains 1127.08 and as before, until we drop below 1194.53, the alternate labelling suggests we're going to see a further rally.

14:56 GMT - SPX Update

For the moment, the possibility of a top for the rally from the August low remains open since the high at 1227.08 has held so far and we took out the low at 1220.29:

SPX 1 min - bearish count:

The above chart assumes 1227.08 was the end of 5 waves up from the August low. It could, however, only have been the end of 3 waves up as shown on the bullish count:

SPX 1 min - bullish count:

This would put us now in wave (iv) with another high to come to complete 5 waves up.

As you can see on both the above charts, it also remains possible that we're still only in a 4th wave of lesser degree so another high would be due even on the bearish count. That remains a possibility until we take out the high at 1194.53, as mentioned in Friday's end of day update.

So, that's the main level I'm continuing to watch. While we're above it, the benefit of the doubt has to be given to the upside.