19:05 BST - SPX Update: 1 min - wave (2) up topped?

The (1)-(2) count has suddenly become more attractive:

SPX 1 min - (1)-(2) down?

For now, anyway!

The next rally needs to be a controlled 3 wave affair, preferably not too deep and really, we need to take out the 1091.15 low now.

18:07 BST - SPX Update: 1 min close up - Now ot never for the (1)-(2) down

Last chance for the (1)-(2) down from the 1104.58 high - I can see a subdividing wave 5 of (5) up starting to develop:

SPX 1 min close up - (1)-(2) down complete or subdividing wave 5 of (5) of [C] up:

If the (1)-(2) count is to remain valid, its got to drop now, otherwise the alternative labelling showing us currently in wave iii of 5 of (5) up comes into play. If we take out 1099.93 (the low labelled "or 2"), before making a new high, the alternative labelling will look ropey. It'll look even less likely if we drop below 1095.97 (the low labelled "or ii") before making a new high.

16:41 BST - SPX Update: 1 min close up

Its difficult to see today's rally as a straight impulse if we're in wave 5 of (5) of [C] to complete wave ii up. It could be a leading diagonal for the first leg up within wave 5, but it didn't make a very deep retracement for the second wave if it was a leading diagonal. Maybe its a developing impulse (these choppy looking waves do have a tendency to just keep going up and develop into impulses) but at the moment it probably looks best as a wave Y correction within wave (2) as shown on this chart:

SPX 1 min close up:

At least for the wave (2) count the invalidation point is close by at 1104.58 and, as I've said previously,  until we see impulsive downward movement, the risk of further upside remains - if we could get 5 waves down to about 1087, without a new high above 1104.58, this wave (2) count would look like a good bet.

To the upside, the next levels I'm looking at if we're in 5 of (5) of [C] up are at about 1107 and 1125.

15:03 BST - SPX Update: 1 min close up wave (2) correction or wave 5 of (5) up both still valid

The risk of further upside either in a continuing wave (2) or  in wave 5 of (5) of [C] (to a high above 1104.58) was highlighted yesterday.  Here's how I'm looking at today's rally:

SPX 1 min close up:

Both possibilities remain equally valid. The wave (2) count is invalidated above 1104.58 on this count. If that's taken out, then the wave 5 of (5) of [C] to complete wave ii on the bearish count will become the focus. If we don't take out 1104.58 then it'll look like we did top at 1104.58.

21:12 BST - SPX End of day update

For both bullish and bearish counts, I was looking for 5 waves up from the 31 August low at 1040.88. 

If you look at the update I posted on Friday  on the bullish counts (you can read it by clicking here), you'll see that for the count shown in chart 1 in that update, it would be wave iii of (i) of [c] in a zig zag. For the count shown in charts 2, it would be wave (i) of [iii] up and for the count shown in chart 3, it would be wave [i] of C up. I did a further update on the bullish counts earlier today, which you can read here.

On the bearish counts, 5 waves up from 1040.88 would complete a 2nd wave correction in an overall downtrend.

For the bigger picture on those bullish counts and the bearish counts set out below, please refer to the 60 min counts page.

Today's action may have left a truncated 5th wave in the 5 waves up I was looking for from 1040.88, or we may still be in the 4th wave of that 5 wave move. 

Here is the position shown on the main bearish count  that has us in a [i]-[ii]-i-ii down from 1129.24, with wave ii as a zig zag (it also applies to the other bearish count where wave ii is an expanded flat, as well as to the bullish counts):


Chart 1: SPX 1 min -  i-ii down from the 1129.24 high:

I've labelled 5 waves up from 1040.88 as complete at 1104.58, but, as I've said above,  its perfectly possible that we just finished the 4th wave of the final 5 up with today's move. That possibility would be eliminated on the bullish and bearish counts if we take out the high at 1087.11, which is the high labelled 1 of (5) in the above chart.

Looking at the bearish count shown on the above chart,  we're retracing the decline from 1129.24.  So far, we've retraced just over 70.7% of that decline. If we only completed wave 4 of (5) of [C] at today's low, for wave 5 and (5) back up, the 78.6% retracement level at about 1110 may be a target.

If we did top at 1104.58 and completed  the first wave down in wave iii with today's early decline, although I can label a 2nd wave retracement complete at 1097.41, its possible we still have more upside in that 2nd wave (its 38.2% retracement is shallow). However, if we start seeing clear impulsive downside action that isn't immediately reversed, the risk of this will be reduced substantially.

Here's a closer look, zooming in on the move from the 1105.10 high at 1105.10:

Chart 2: SPX 1 min - from the 1105.10 high:

The initial decline today certainly looks impulsive but we really need to take out the 1187.11 high to eliminate the possibility that we're still just in wave 4 of (5) of [C]. Until then, the risk of further upside remains.

Even if that level is taken out, since the bullish counts would be in 2nd wave downward retracements if we have completed 5 waves up from 1040.88, the risk of further upside will remain at least until we take out 1040.88. After that level, the bullish counts are still technically valid (unless we take out 1010.91), but would probably be severely damaged.

Obviously, there's no way to tell whether we're in the bullish or bearish counts, so without taking out the levels mentioned above, we can't say if this current decline means the start of a big down move or if its just a pause in a longer term uptrend. We can only continue to identify the levels that the developing elliott wave counts provide which increase or decrease the odds in favour of one count or another.

At the moment, with the counts I'm following, those levels to watch are now as follows:

1) for both remaining bearish counts, we have to stay below the high at 1129.24;

2) if we take out 1129.24, that will eliminate those two remaining bearish counts for the move down from that high and will focus attention on the bullish counts. The first bullish count shown in the update posted today  is bearish once wave [c] of 2 completes. If that count is in play, we would need to see impulsive downside action once wave [c] and 2 end, otherwise, focus will have to switch to the bullish counts under Option 4;

3) taking out 1087.11 before we make a new high will eliminate the possibility that we are still in a 4th wave correction before a further move up to complete the 5 waves up needed on all counts from the 1040.88 low;

4) taking out 1065.21 will reduce the odds that the bullish count shown on chart 1 in the update I posted on Friday is playing out (see the update I posted today);

5) taking out 1039.70  will eliminate the bullish counts as labelled. Until we take out 1010.91, however, there would still be a possibility that they are in continuing downward corrections, so didn't start their respective bullish moves at the 1040.88/1039.70 lows, but it might then be considered low probability and my focus would switch to the bearish counts.

18:14 BST - SPX Update - 1 min close up bear count and 60 min time and price levels

Here's a possible count for the start of wave iii down:

SPX 1 min close up from 1105.10:

I've shown a count for a complete wave (2), but with the retracement only being 38.2% so far, further upside can't be ruled out. Neither can the possibility that we're still in wave 4 of (5) of [C] up, so yet to complete wave ii.

Its interesting that this move down today has stopped at the first Gann based price target assuming a top was made at 1104.58:

SPX 60 min Gann time and price levels:

The time cycle shown on this chart is the same as that shown on the daily chart I posted last night.

Of course, the fact that we stopped at this first Gann level based on a high at 1104.58 doesn't mean that we have topped at that high. For the moment, we just have to stay below 1104.58 for the bear case and get another 5 waves down (taking out 1087.11 to rule out the on-going wave 4 of (5) possibility).

15:37 BST - SPX - Bullish counts update

Today's decline also fits in with the bullish counts which all needed 5 waves up from 1040.88 as part of their bullish moves off the July low - please see the update on those counts that I posted on Friday.

Here's the close up chart relating to the count shown on chart 1 of that previous update:

SPX 1 min - wave [c] of a zig zag from the July low:

For this count, 5 waves up from 1040.88 is wave iii of (i) of [c] within a minor wave 2 corrective rally. So, if we're now in wave iv of (i), we need to stay above the wave i high at 1065.21 in order not to invalidate the count. If we drop below it, then we'd have to assume that wave (i) ended at the 1040.58 high and that the retracement down would be wave (ii). I can't say it would look very good, so I might then start to prefer the other two bullish counts. However, this bullish count won't be invalidated unless we take out 1039.70. There would still be a possibility then that we are still in wave [b], but again, it wouldn't look that great and the bearish counts might then start looking more likely.

For the other two bullish counts, 5 waves up from 1040.88 would be wave (i) of [iii] for the count shown on chart 2 of Friday's update and wave [i] of C for the count shown on chart 3 of that update. 

So, assuming those 1st waves are now complete, we'd have to stay above 1040.88 on this current pullback (though as I mentioned on Friday, 1039.70 could possibiliy be the starting point and, so the invalidation point for these counts). If we don't, focus would have to switch to the bearish counts.

14:58 BST - SPX Update: wave ii top with a truncated 5th within [C]?

There's a possibilty that, on the bearish counts (see Friday'e end of day update) we topped at Friday's end of day rally in wave ii, with a truncated 5th wave:

SPX 1 min from 27 August low:

Its possible that the (1)-(2) count that put the wave ii high at 1105.10 that I showed on Friday is actually what we've seen, but its certainly easier to count the 5 waves up for [C] that we needed from the low at 1040.88 with a truncated 5th at 1104.58. For this reason, I favour the count shown above rather than the (1)-(2) count with the wave ii top at 1105.10.

Here's a close up showing wave 5 of (5) of [C]:

So, the current count for the bear case puts us at the start of wave iii down. Obviously, this count is invalidated by a move above 1104.58 - in that case, the alternative shown (that today we just had a wave c within wave 4 of (5) of [C] would be the most likely count for the bear case (that could be ruled out if we drop below 1087.11 before making a new high).

14:26 BST - Dollar Update

The dollar looks like it may have completed a 3 wave move off the high of 83.522 at yesterday's low of 81.876 - not far off the 50% retracement level mentioned in my last post.

Here's a 60 min chart:

You can see that even on this time frame we appear to have 5 waves up from that low. If we're starting wave (iii) up then holding the low is, of course, crucial, so that's the level to watch for now. 

We need a controlled 3 wave pullback, at which point, I'll be thinking long with a stop below the low of the pullback or the low at 81.876. With the risk of more downside outlined in my last post, I wouldn't want to give this too much room at this stage.

 

14:43 BST - FTSE Update

Referring back to my post on 2nd September, the FTSE is looking today like it may now have made that wave up and over its previous high of 5418 I was looking for on both bullish and bearish counts (Please click here to see that post which shows my interpretation of the elliott wave position on FTSE - bullish and bearish).

Today, we've seen what looks like a nice 5 waves down from its recent high at 5459.40. The question now, if we have seen 5 waves down, is whether its a wave A or a wave 1. Obviously, we can't know for sure. We just have to wait and see how it moves back up and once it forms three waves back up, that could be a reasonable place to take a short. However, you'd want to be out above the high of the three waves (or, if your trading rules allow it, above the high at 5459.40).

Here's a view of the FTSE which shows why we may have seen at least a temporary top, aside from the elliott wave count - a confluence of gann fan resistance right at yesterday's high:

FTSE Daily price and time with gann fans:

The green and red fans are drawn with the 1x1 lines connecting the opposite corners of the time and price square (which is based on gann levels). The pink and black fans are drawn from one pivot high across another and from one pivot low across another. You can see that lines from three of the fans crossed at yesterday's high.

Here's another gann chart going back to the February low, showing what appears to be a 48 day cycle from low to high, high to low and now, low to potential high:

FTSE Daily price and time from February low:

Finally, some fibonacci stuff:

FTSE Daily retacement of April to July decline:

As you can see from the chart, in fibonacci terms, we've reached the 61.8% retracement of the decline from the April high - a good stopping point for a 2nd wave retracement if we're in the bearish count. 

Also (but not shown on the chart) the rally from the August low is .618 the length of the rally from the July low to the August high in terms of price, almost to the penny (61.8% would have been 5459.37). In terms of time, its just about .382 x the length of the July/August rally (.618 is the square root of .382).

Finally, as you can see, if you draw an upward pitchfork using the July low, the August high and the August low, FTSE's rally touched the median line of that fork and has backed off from it today. If you're rooting for the bearish count, you want to now see a quick dash for the lower line of the green fork in a move that takes FTSE down and through the median line of the downward blue fork.

Anything less than that, given that the bearish wave count would put FTSE in a 3rd wave down, would have to be cause for concern on the bear case.

22:45 BST - SPX Update: Time and Price Resistance suggesting a turn?

Undoubtedly, the bullish case looks very appealing following last week's action so I thought I'd post something that might suggest that there should be at least a temporary halt to the advance, if it has any impact. 

I should warn you that the following charts are very busy and require a bit of effort but really, they're not that bad once you get over the initial confusion of a mass of lines. Just don't look at them with a hangover.

Both charts use Gann based techniques relating to support and resistance and time.

This first chart shows the SPX from the 26 April high within a grid I've constructed from a Gann based time cycle (vertical lines) that the market seems to have observed, and Gann derived price levels at which price has pivoted or congested (horizontal lines). I then drew diagonals crossing through, as far as possible, the points at which time and price crossed. 

The result is a grid showing potential turning points in time and/or price at the vertical or horizontal lines and/or the diagonals, including points at which two or more cross. The diagonals can also be used to mark out the path of trends:

SPX Daily - Time and Price:

You'll see that the vertical time lines have pretty much caught the turn dates - see yellow circles. It was early at the May high, but that early turn seems to have resulted from price rising up to the red dotted diagonal which price had already hit on its first attempt to recover from the intial drop from the 26 April high. That diagonal did subsequently form the upper line of the down channel that price stayed within for most of the decline to the July low.

From the July low, price moved within the diagonals highlighted in purple and from the August high, it pretty much stayed within the diagonals highlighted with the black dotted lines.

It now seems to be moving up within the channel delineated by the diagonals I've highlighted in green.

We're now at the upperline of the green channel and approaching the next time line on about 10 September. We're also approaching a point where two diagonals cross as well as one of the horizontal price lines - see the turquoise circle.

All of this together seems to suggest a reversal coming up. 

The two diagonals that cross in this area, do so at about 1113/1114 on 9 September. The diagonal that forms the upper line of the green channel crosses through the time line at about 1116 and there is the horizontal price line at about 1121. The upperline of the green channel is at about 1108 on 7 Sept and about 1110 on 8 Sept. Coupled with the time points mentioned in my update in relation to the 60 min counts page on Saturday and the update to that page itself, which suggest a possible turn date of 7 Sept, this gives a range for a turn date of between 7 and 10 Sept.

Of course, you shoudn't just short simply on this basis. You need to see some price action that confirms a potential top. For example, at the flash crash low in early May there was the gap up the next day, while at the July low, there was the large bottoming tail candle, the high of which was traded above two days later.

The reason its important to wait for price action to show a reversal is because its perfectly possible for price to just keep moving up above the upper green channel line, to the next diagonal above it, and so, widening the channel for this up move (you can see that this happened with the drop from the April high to the early May low on the way down).  

This is a risk to consider given that just above the turquoise circle you can see that on this 10 September time line there is a point where its not only crossed by a horizontal price line at 1141, but there is also a cross of two diagonals - see the green square. Potentially powerful time and price resistance if price were to get there.

This next chart uses the Gann fan with the 1x1 line drawn across the top of two pivot highs in order to find levels of future resistance. Its not the traditional method of drawing the 1x1 at a 45 degree angle, but it was effective during the uptrend in identifying support - obviously, the 1x1 lines were then drawn across two pivot lows.

There are six different fans (I've removed most of the lines associated with each which are not currently relevant - yes, it could have looked alot worse):

SPX Gann fans from 26 April:

Now, it may only take one or two fan lines to provide resistance to a move. For example, the the rally into 13 May stopped at resistance from only one fan  line drawn from the 26 April high and the high on 29 April. The rally into 21 June stopped at resistance from two different fans. 

So, with 6 different fans suggesting resistance at or not too far above where we are now - well, you'd think it would mean something, especially when coupled with the price and time resistance that we're approaching as illustrated on the first chart above.

Still, as I've tried to emphasise, its crucial to wait for a reversal signal in the form of price action and until we see that, the bullish move that was started last week must be given the benefit of the doubt.

13:03 BST - SPX Update - 60 min counts page updated

I've updated the 60 min counts page. You can view it by using the tab in the menu above or by clicking here.

This last week, price action did exactly what I had said we wouldn't want to see it do on the bearish counts - it broke above the down channel that I had drawn from the April highs and has retraced a significant amount of the declline from the August high.

It doesn't rule out the bearish counts, but those under Options 1 and 2 (the former in particular) are starting to look less likely. I've said over the past few weeks that this would be the case if we didn't start to see impulsive downward action that would obviously mark a 3rd of a 3rd wave down.

However, while the bullish counts have certainly come to the fore this last week, the bearish count under Option 3, in my view, is the one that has been least adversely affected by last week's action.  It can certainly withstand a move above the April high if we are still in a single zig zag up from the July low (the single zig zag from the July low is one of the bullish counts I've been showing, but once its final leg up from the August low is complete, it would be bearish - you can see it on chart 1 in the update I posted on the bullish counts yesterday).

If you're looking for symmetry in the market, there's a potentially interesting time relationship coming up on Tuesday based on the count shown under option 3, if we are still in minor wave 2, which may suggest a turn. Its something worth watching, but not a reason in itself to go short. Price action needs to confirm a turn.

If we are in a one-two move down from the August high, as labelled for the bearish counts, there's another interesting time relationship coming up on Tuesday. From the highest close on 9 August to the lowest close on 26 August we had 13 traded days. From that lowest close we will hit 8 traded days on 7 September. So, if we were to see further upside on 7 September (not necessarily above 1129.24), we would have a fibonacci triangle in traded days whose sides would measure 13, 8 and 21. Again, something that suggests looking out for prcie action that might confirm a top, but not a reason to go short on its own.

 

21:41 BST - SPX End of Day Update

For both bullish and bearish counts, I was looking for 5 waves up from the low at 1040.88 which occurred on 31 August. 

If you look at the update I posted today on the bullish counts (you can read it by clicking here), you'll see that for the count shown in chart 1 in that update, it would be wave iii of (i) of [c] in a zig zag. For the count shown in charts 2, it would be wave (i) of [iii] up and for the count shown in chart 3, it would be wave [i] of C up.

On the bearish counts, 5 waves up from 1040.88 would complete a 2nd wave correction in an overall downtrend.

The counts I show below on the charts of the bearish counts for a 5 wave move up from 1040.88 apply also to the bullish counts.

For the bigger picture on those bullish counts and the bearish counts set out below, please refer to the 60 min counts page.

Today's action eliminated one more bearish count, leaving the following ones intact: 

Chart 1: SPX 1 min -  i-ii down from 1129.24:

On this count, we're retracing the decline from 1129.24. So far, we've retraced just over 70.7% of that decline. If there is further to go, the 78.6% at about 1110 may be a target.

This count would be invalidated if we take out the high at 1129.24.

Here's a closer look at today's action showing the move off the 1039.70 low I have as wave i:

Chart 2: SPX 1 min from the 1039.70 low:

It looks like we are about to complete those 5 waves up from 1040.88.

Here's a closer look, zooming in on the move from today's high at 1105.10:

Chart 3: SPX 1 min - from the 1105.10 high:

On this chart, the count for a high above 1105.10 is shown as the alternative on the chart I was using in earlier posts to show a possible top at 1105.10, but that seems unlikely with the move up we saw in the last few minutes of trading.

Assuming that we're in the last leg up to complete wave [C] of ii, you'll see from the note that wave v of 5 of (5) of [C] may be in the process of extending. 

The other possibility is that it may be forming an ending diagonal. If so, and assuming we started the 3rd wave of the diagonal at 1102.40, that 3rd wave must stay below 1106.24 otherwise the 3rd wave will be longer than the 1st, in breach of the rules for contracting diagonals. It would then become more likely that wave v of 5 is extending.

Once we complete wave ii, we would expect to see strong implusive moves to the downside - behaviour consistent with a 3rd wave decline. Anything less would have to be taken as a warning that this bearish count is not playing out and that the decline is simply part of a corrective move within one of the bullish counts.

The other bearish count that has survived this week has wave i down from 1129.24 complete at the low of 1069.49 and places us currently in wave ii which is taking the form of an expanded flat. Here's the chart:

Chart 4: SPX 1 min - wave i at 1069.49, wave ii expanded flat:

As I've said in previous end of day updates, I don't particularly like this count, but its valid and if its correctly labelled, we need to see 5 waves up from the low marked [B] at 1039.70. As you can see from the chart,  we may be on the verge of completing this too.

The 61.8% retracement level for this count is at about 1106. The count shown in chart 3 above for the move up from 1094.99 would also apply here and if the final leg is taking the form of an ending diagonal, the 1106 level may well be met. If the last leg up is extending, it feasible that the 78.6% level at about 1116 could be reached.

This count would be invalidated if we exceed the high at 1129.24.

So,with another bearish count  invalidated today, the levels to watch are now as follows:

1) for both remaining bearish counts, we have to stay below the high at 1129.24;

2) if we take out 1129.14, that will eliminate those two remaining bearish counts for the move down from that high and will focus attention on the bullish counts. The first bullish count shown in the update posted today  is bearish once wave [c] of 2 completes. If that count is in play, we would need to see impulsive downside action once wave [c] and 2 end, otherwise, focus will have to switch to the bullish counts under Option 4.

Have a great weekend!

20:04 BST - SPX Update: 1 min - one more high, or did we top at 1105.10 on the bearish counts?

In my last post I speculated whether we had completed 5 waves up from 1040.88 at 1105.10, which, on the bearish counts, should mark the end of wave ii. Here's an update on that possibility, but also showing how we could count the move up from 1094.99 for that last wave up that was expected:

SPX 1 min - from 1105.10:

You can see that on the basis of the alternative labels for one more high to complete wave ii, we have to stay above the high at 1098.95 if we are currently in wave iv of 5 of (5) of [C]. If we take that out before making a new high, then it increases the chances that the top for wave ii on the bearish counts was at 1105.10.

17:40 BST - SPX Update: 1 min chart from today's high

You can see from my earlier post on the bearish count that the expectation is that there is another leg up to come to complete this wave ii rally. As mentioned, there is a possibility that we completed it at today's high as the alternate labels on the chart in that post suggest. Given the way we came down from today's high, it is tempting to label the end of wave ii at 1105.10 as shown in this chart:

SPX 1 min - from the high at 1105.10:

The move down does look impulsive, it has to be said. Furthermore, the action since the low at 1094.99 looks corrective. Its certainly worth considering. Taking out today's high would, obviously, invalidate this.

16:39 BST - SPX Update: Update on the bullish counts

Here's an update on the bullish counts I've been following (last update can be read here). For the context of these counts, please see the 60 min counts page.

Chart 1 - 60 min - single zig zag from 1010.91 still in progress:

This count currently has us in wave (i) of [c] of minor 2. 

Here's a close up of this count, picking up the above chart from the low at 1039.83 on 25 August:

SPX 1 min - from 1039.83 low: 

It looks like we need another up leg to complete wave iii of (i) of [c], but its quite possible that it topped at today's current high. If  so, we're in wave iv of (i) of [c] now and we have to stay above the wave i high at 1065.21. Taking that out without a new high above 1105.10 will invalidate the labelled count. 

However, it may just mean that we saw the wave (i) high at 1105.10 and does not invalidate the count from the wave [b] low altogether. The level at which this count is invalidated if the assumption is that we've started wave [c] up, is 1039.70.

If this count is playing out and wave [c] is to equal wave [a], a target for the end of wave [c] would be about 1158.

Chart 2: 60 min first bullish count under Option 4 - impulse up from 1010.91:

Chart 3: 60 min - second bullish count under Option 4 - leading diagonal up from 1010.91:

The counts shown on charts 2 and 3 above now need us to stay above 1040.88 for the count as labelled to remain valid (of course, it possible that wave [ii] bottomed at 1039.70, not 1040.88, in which case, that would be the relevant level to watch).

15:35 BST - SPX Update: 1 min Possible count to a top if we take out 1087.11

If this is wave 4 of (5) of [C] we have to stay above the wave 1 of (5) high at 1087.11. If we don't before making a new high, then its quite possible we may have seen the end of this up move:

SPX 1 min from 25 August low:

14:36 BST - SPX Update: 1 min: One more bearish count eliminated, 2 left plus three bullish counts

The i-ii-[1]-[2] count has been invalidated with the rise above the 1100.14 high, so from chart 1 in yesterday's end of day update, that leaves the i-ii count from the 1129.24 high:

SPX 1 min - i-ii down from 1129.24 high:

The next retracement level to watch, if price doesn't turn down from here is 1110 which is the 78.6% retracement level.

This count, like the expanded flat wave ii count shown in chart 3 in the above update will be invalidate above 1129.24. Above that level, the bullish counts (see the last update on these by clicking here) will come into play.

23:49 BST - SPX 1 Update: Replacement for chart 2 in the end of day update

I posted the wrong chart 2 in today's end of day update. I was updating the labels on one computer and using another to post, but forgot to update the chart on the latter computer before saving and posting it. So, here it is with that count for a possible end to wave 5 of (C) of [2]:

SPX 1 min - close up:

When I said in the end of day update that I wasn't convinced about the count shown, it was a reference to the purple numbering within wave v of  5.

21:25 BST - SPX End of Day Update

For both bullish and bearish counts, I'm looking for 5 waves up from the low at 1040.88 which occurred on 31 August. 

If you look at my last update on the bullish counts (you can read by clicking here), you'll see that for the count shown in chart 1 in that update, it would be wave iii of (i) of [c] in a zig zag. For the count shown in charts 2, it would be wave (i) of [iii] up and for the count shown in chart 3, it would be wave [i] of C up.

On the bearish counts, 5 waves up from 1040.88 would be all or part of a 2nd wave correction in an overall downtrend.

The counts I show below on the charts of the bearish counts for a 5 wave move up from 1040.88 apply also to the bullish counts.

For the bigger picture on those bullish counts and the bearish counts set out below, please refer to the 60 min counts page.

So, here is the position on the bearish counts following today's action: 

Chart 1: SPX 1 min - i-ii-[1]-[2] or wave i down from 1129.24:

The main count on this chart shows a subdividing wave iii down and puts us close to the end of wave [2] of iii.  As mentioned in the intraday updates, we've retraced about 78.6% of wave [1]. Wave 5 of (C) is about equal to  wave 1 of (C). Its not a bad point for wave [2] to end.

However, as mentioned in the intraday updates, if I put the wave 4 of (C) low at 1076.22, we may well only have completed wave i of 5 of (C) up today, and started wave iii of 5 of (C).

This main count is invalidated if we take out the wave ii high at 1100.14.

The alternate count shown on chart 1 has us only having completed wave i down, so puts us now in wave ii up. We'd be retracing the entire decline from 1129.24, so the upside on this count could be a bit more than on the main count. We've already exceeded the 50% retracement which was at 1084. If this count is playing out, the next levels to look at would probably be the, 61.8% at about 1095 and 78.6% at about 1110.

This alternate count would be invalidated if we take out the high at 1129.24.

Here's a closer look at today's action showing the move off the 1039.70 low I have as wave [1] of iii (or wave i on the alternate count shown on chart 1 above):

Chart 2: SPX 1 min close up:

I've shown a possible count that completes wave 5 of (C), but I'm not convinced its correct. I'd have to see an immediate impulsive drop tomorrow that at least takes out 1082.72 in order to start thinking that a top might be in.

The third bearish count has wave i down from 1129.24 complete at the low of 1069.49 and places us currently in wave ii which is taking the form of an expanded flat. Here's the chart:

Chart 3: SPX 1 min - wave i at 1069.49, wave ii expanded flat:

As I said in yesterday's end of day update, I don't particularly like this count, but its valid and if its correctly labelled, we need to see 5 waves up from the low marked [B] at 1039.70. As you can see from the chart,  if we have seen the completion of 5 waves up from the 1040.88 low to complete wave (3), we still need a dip in wave (4) and a further high in wave (5) to complete wave [C] on this count. 

Its quite possible on this count that it could reach the 61.8% retracement level at about 1107. But equally, it could fall short - if it failed to get above the wave [A] high at 1100.14, it would be a running flat rather than an expanded flat.

This count would be invalidated if we exceed the high at 1129.24.

So, no counts were invalidated today, either bullish or bearish and therefore,  the levels to watch remain as set out yesterday: 

1) for the main count shown on chart 1, the  i-ii-[1]-[2] down from 1129.24, we have to stay below the wave ii high at 1100.14, otherwise, that count is invalidated;

2) if we take out that 1100.14 high, then, for the bear case,  we may be in  the alternate count shown on chart 1, which counts the completion of wave i down from the 1129.24 high, or in the expanded flat for wave ii shown on chart 3, or one of the more bullish counts shown in the update posted yesterday (see here).

3) if we take out 1129.14, that will eliminate those two remaining bearish counts for the move down from that high and will focus attention on the bullish counts. The first bullish count shown in the update posted yesterday  is bearish once wave [c] of 2 completes. If that count is in play, we would need to see impulsive downside action once wave [c] and 2 end, otherwise, focus will have to switch to the bullish counts under Option 4.

19:52 BST - SPX Update: 1 min chart - possible top for wave [2]?

Well, its possible that the new high at 1087.53 marks the end (or nearly the end) of wave 5 of (C), though I have to say, that wave iv of 5 went on a bit when compared to wave ii:

SPX 1 min - i-ii-[1]-[2] from 1129.24 high, close up from 27 August:

You can see the alternate noted on the chart, that we've only completed wave i of wave 5 of (C). This arises only because of the size of wave iv against wave ii of 5 on the labelling I've shown. Its a risk that has to be factored in, in my view.

If we've topped, or nearly topped in wave (C), we need to start dropping impulsively and take out the 1076.20 low. Until we do that, the possibility of an extending wave 5 will continue to loom.

As mentioned before, it would be nice if wave [2] were to top here at the 78.6% retracement of wave [1] and with wave 5 being a .786 extension of wave 1 of (C). In addition, timewise, wave [2] is now just about .618 x wave [1] in terms of time (.786 is the square root of .618). All very interesting, but price action now needs to show us that a top is in. At the time of posting, I can't say its convincing me as yet.

19:04 BST - Dax and FTSE update

While SPX has been moving sideways, I though I'd take a quick look at the Dax and the FTSE.

Here's the Dax daily chart (it hasn't been updated with today's action, but the close today was 6083.85):

Dax Daily: 

Last time I posted on this I was thinking we may have seen a top - see the post of the 15 min chart by clicking here - (we were in the midst of the wave I've labelled (i) in the daily chart above as it turns out).

You can see from the daily chart what looks like a nice 5 waves down from the August high (the Dax, you might recall, took out its April high, diverging against the other main indices like SPX, FTSE, etc). So, it seems like there's a good chance that a top was seen in early August.

However, looking at the 60 min chart from the August high, you can see that like SPX, it can be labelled as an impulse or as a double zig zag (see the black lines):

Dax 60 min:

If its a zig zag, it would likely be part of the (X) wave labelled as an alternaive on the daily chart. Even if its 5 waves down from the August high, it could be an [a] or [c] wave within that (X) wave correction. This would imply  further highs to come, much like the bullish alternate counts under Option 4 which I show on SPX (see the 60 min counts page and the last update on those counts).

In this respect, the Dax, which was outperforming, resulting in its August high, is now in line with SPX - right down to the ambiguity over whether its an impulse or a corrective wave down from its high.

The FTSE caught my eye because its getting so close to it recent high at 5418.58. 

Last time I looked at it,  it seemed like we were topping if we hadn't already done so - see the last post here. In fact, we went on to make a slightly higher high at 5418.58 on 9 August. I can still count that into a nice top with the same labelling shown on the chart in that last post.

The only problem is that the price action since that high isn't easy to count as 5 waves down. Furthermore, the move up from the  low made on 25 August is not that far off the 9 August high.  

I'm starting to think that maybe FTSE hasn't quite finished the wave [ii] correction labelled on the chart in the previous.

So, here's a possible count to accommodate a further push up to complete wave [ii] (this daily chart hasn't been updated with today's action, but FTSE closed at 5371.04):

FTSE daily:

You'll note the alternative count shown on this chart, which would mean that the July low could have been the start of a major move up in the FTSE, again, in line with the bullish alternate counts under Option 4 for SPX.

Here's the 60 min chart showing the main count in close up from the 5418.45 high:

FTSE 60 min:

You can see that the move down from that high doesn't look like an impulse. It can be counted as such, but it wouldn't be very pretty, as you can see from the alternate labelling. At first look, it could be a leading diagonal, but on closer examination, it transpires that what would be the 3rd wave of such a diagonal is shorter  than the 5th wave. 

So, this zig zag seems to be the best way to count it if we take out the 5418.45 high. If we don't take out that high, I'll have to adopt that ugly impulse count. Today's high would be a good turning point for FTSE if it did top in wave [ii] at 5418.58 - its an 88.6% retracement.

16:21 BST - SPX Update: 1 min chart updated

If the wave 4 of (C) low was at 1076.20, then it looks like we still need another high above 1087.11:

SPX 1 min - i-ii-[1]-[2] from 1129.24, close up from 27 August:

If we take out 1078.59 on this assumed wave iv of 5, then it will seem more likely that wave 4 bottomed at 1076.22 and that the 5 waves up from there completed wave 5 (but until we take out 1076.22, the risk that it was only the 1st wave of wave 5 remains).

Today's high would be a nice place for a top - wave 5 of (C) is 78.6% of wave 1 of (C) at 1087.11 and we've retraced 78.6% of the decline from 1100.14.

16:09 BST - SPX Update: 15 min chart: divergences between price and technical indicators suggest a top should be in or near

Divergences on the 15 min suggest we should be near a top of some sort for this move off the late August low:

SPX 15 min:

Its consistent with a count of 5 waves up near completion from the low on 31 August as shown in my previous post. However, price action needs to confirm now.

15:19 BST - SPX Update: 1 min possible wave [2] high?

It is possible to count 5 waves up from the 1076.20 low I've labelled as wave 4 of (C) at pretty much the 78.6% retracement level assuming we're in a i-ii-[1]-[2] down from the 1129.24 high:

SPX 1 min - i-ii-[1]-[2] close up from 27 August low:

However, be warned, we could be in an extending wave iii within 5 of (C). Taking out the high at 1081.30 (the high I've labelled wave iii but which would be the 1st wave in an extending wave iii) before making a new high would preclude this.  Or, if the wave 4 of (C) low should be at 1076.22 (I mentioned this in yesterday's end of day update) today's high looks like it would only be wave iii of 5. Again, taking out the high of 1081.30 would likely eliminate this. 

So, on this labelling, the high at 1081.30 looks like the level to keep an eye on. Until we take it out, the risk of further upside remains.