Thursday, 18 November 2010

21:15 GMT - SPX - End of Day Update

The picture hasn't changed too much since my last post. The bearish count is still valid with the high at 1207.43 not yet having been taken out. The bullish counts also remain intact. Assuming we decline from around current levels, its a matter of waiting to see how that decline behaves and what levels it reaches. If we continuing moving up from here, we have to wait and see whether the high at 1207.43 continues to hold to keep the bearish count (and the alternate bullish count) alive.

As usual, the context for these smaller timeframe charts can be found on the 60 min counts page.
Here's the bearish count:

Chart 1: SPX 1 min - bear count:

I've moved the high for the rally from 1175.87 to the high at 1199.36, so a truncated 5th wave. That's because the decline from 1209.29 isn't obviously an impulse, so I'll assume it was part of wave iv of C of (2). From the 1199.36 high, we have what may be the start of a larger impulse down. We'll have to see how it develops.

As I mentioned in the last post, I'd have more confidence in the bearish count if we can now take out the high at 1183.56 in an impulsive manner. That would start to reduce the likelihood of one of the bullish possibilities mentioned below.

Here's the bullish count:

Chart 2: SPX 1 min - bullish count:

For the main bullish count, I've re-labelled the move up from 1173 as a double zig zag, with today's high as wave [A] of the second zig zag. However, its possible that wave (x) also topped today using the count shown on Chart 1 above. If it has, or if we're in the alternate bullish count labelled, we should see an impulsive decline taking out 1173 fairly quickly, much as we'd expect to see on the bearish count, assuming we're going to see another zig zag for wave (y) on the main bullish count.

As I mentioned in my last post, the further alternate bullish count shown in the pink note at the top of Chart 2 remains a possibility until we take out the high at 1183.56. Its odds will be reduced if we do that and will be virtually eliminated if we then take out the low at 1175.87. It will be invalidated if we take out the low at 1173.

So, for the way I've labelled the bearish count, 1199.36 now has to hold for it to remain valid. If we take that out, then the next level to watch remains 1207.43. If that gets taken out, the bearish count will be invalidated. To the downside, taking out the high at 1183.56 will help to increase confidence in the bearish count.

For the bullish count, the main count is looking for a further high to complete wave (x). However, if the alternate is playing out or we topped in wave (x) today, we should see a quick decline that will take out 1173. While we're above 1183.56, the possibility of the further alternate bullish count remains on the table and would imply a new high above 1127.08, probably over the course of the next few days, before any substantial down move is seen.

17:50 GMT - SPX Update

The alternative bearish count was duly invalidated, but the main bearish count currently remains intact:

SPX 1 min - bear count:

Its possible to count 5 waves up from the 1175.87 low so I've changed the labelling from W-X-Y to A-B-C for wave (2) of [3].

The retracement so far has reached the 78.6% level. We really need to start dropping now if this count is correct. The invalidation point is at 1207.43.

An impulsive decline from around here would be a start, but I'd then want to see a quick move taking out the A wave high at 1183.56 to provide a degree of confidence. Until we see an impulsive decline, I'd have to say that the wave count probably isn't complete and the risk of further upside remains high.

Both the main and alternate bullish counts are also still intact.

SPX 1 min - bullish count:

Both of these would suggest a decline should be due if the wave count is complete. However, for the main bullish count, its possible that wave (x) could form a more complex pattern. An impulsive decline from here could reduce the odds of that.

Note the pink note at the top of the chart - this further alternate would make 1173 a wave (iv) of [iii] low, with the current rally being part of wave (v) of [iii] up. If we take out the high at 1183.56 on the next decline, the odds of that further alternate count would be reduced.  Taking out 1175.87 would pretty much eliminate it (though really, its only invalidated below 1173). While the market is positioned to make 5 waves up from 1173, this further alternate count remains on the table and would imply a new high above 1127.08 is likely quite soon.

14:44 GMT - SPX Update

The main bearish count is looking on track. Now we just have to stay below 1207.43 for this to remain valid. The alternate bearish count is still valid at the moment, but could be quickly negated by a move above 1194.08:

SPX 1 min - bear count:

The main bullish count is also looking OK. This will be the most likely count if we do take out the high at 1207.43 and negate the main bearish count. The alternate bullish count is still a possibility, but it too will be negated above 1207.43:

SPX 1 min - bullish count: