17:13 BST - SPX Update on the short term bullish count

On the short term bullish count, the triangle is out so we're left with a double zig zag for wave (iv):

SPX 1 min - bullish count close up:

Once this current move down bottoms, the high at 1148.16 is going to be important (that's where I have [B] of y on the above chart) - its the high of wave [2] in a potential impulse down on the bearish count, so has to hold if that count is playing out (see the previous post). If we take out that high, this short term bullish count is going to become more likely.

17:02 BST - SPX Update on the bearish count

I've re-jigged the labels on the bearish count to show a today's high as wave [2] in a [1]-[2] dwon from 1157.16 instead of wave (2) in a [1]-[2]-(1)-(2). This means we're currently in wave (1) down now:

SPX 1 min - bearish count close up:

15:37 BST - SPX Update on the bearish and bullish counts

Here's the bearish count - the drop from today's high does have a 5 wave look about it, so we may have seen the c wave of Y of (2) truncate. Beware, its possible we're still in wave (2) or even [2], so I'm watching the highs where I've placed those wave labels, 1148.16 and 1149.59:

SPX 1 min - bearish count close up:

Here's the short term bullish count - the triangle I've outlined will be invalidated if we take out 1136.08, but that still leaves the potential zig zag which I have as the main labelling. Either could be playing out at this stage:

SPX 1 min - short term bullish count close up:

Today's low could be the e wave of the triangle, but the move up from there doesn't look impulsive, so we may well have another drop below today's high to come to complete it.

For the bigger picture on these counts, see the 60 min counts page. The bearish count is shown under Options 1 and 2, while the bullish count is shown under Option 3.

11:04 BST Dollar Update

The dollar is starting to look again like its completing 5 waves down from the high I have labelled as wave B on the overall bullish count. Here it is in the 80 min chart showing the move down from the June high.

Dollar 80 min:

At the low on Friday, wave C is about .618 x wave A.

Here's a closer look from the high labelled B:

Dollar 60 min:

Obviously, in a strong downtrend as we've seen in the dollar over the last few months, its always going to be difficult to identify the end of the move. We can only label it as best we can to find potential high probability turning points and see if it holds.

Here's an even closer look from the high labelled (iv) within the wave I'm labelling as wave [v] of C:

Dollar 5 min:

As you can see from this chart, I think we need a move up in wave iv and then a further decline in wave v to complete wave (v) of [v] of C. However, it is possible to count wave (v) of [v] complete or just about complete at Friday's low, as you can see from the alternate labelling.

Non-one knows, of course, if we've bottomed. We just need to see some price action that might suggest a low is in place (I'm assuming that the overall bullish count is playing out).

As I've said many times before, the initial sign of a low will be a strong impulsive 5 wave move up followed by a 3 wave pullback that stays above the low. We then need a further 5 waves up that holds above the high of the first 5 waves up. Its been at this point that previous potential impulse moves up have failed - they've failed to hold above the high of the first 5 waves up. This has been the warning that further downside was possible because it has meant that we're left with either a 3 wave move up (obviously, corrective) or a potential one-two-one-two count forming. In a downtrend as we've seen, its better to give the benfit of the doubt to the downside in this situation.

So, for the moment, I'm assuming that the next bounce will be wave iv of (v) of [v]. However, if we were to take out the wave i of (v) low at 78.703 I'd have to start thinking that the alternate labelling is playing out and that Friday's low may have marked the end of wave C.

23:01 BST - SPX: 60 Min Counts Page Charts Updated

I've updated the charts on the 60 min counts page to take account of this week's action. Options 1 and 2 show the bearish count of a top ay 1157.16 based on the ending diagonal (though as mentioned in the intra day  and end of day updates, its possible that we're still in wave v of the diagonal, with a further high yet to come).

Option 3 shows the short term bullish count that I posted pre-market today.

21:16 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm  looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

So far, the high at 1157.16 has held as a potential top based on the ending diagonal count.

Here it is on the bigger picture of that count for the move up from the August low (labelled as if Option 1 on the 60 min counts page is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

Here's a closer look: 

Chart 2: SPX 1 min - 5 waves up from the August low close up:

The labelling of the move from the 1157.16 high as the initial stages of minor wave 3 down remains tentative at the moment since we haven't taken out any significant levels to the downside as yet.

As I said in yesterday's end of day update, I want to now see an impulsive move down that takes out the low at 1132.09 and the low at 1122.79. Taking out the first level will preclude a further high to come in wave v of the diagonal that I've labelled on the above charts. Taking out the second level could start to make the bullish case look doubtful (though it won't be invalidated).

It may be encouraging for this count that since the drop from the high, we've moved in what looks like a corrective, mostly sideways manner. However, at the same time, until we see something clearly impulsive to the downside, we can't be sure that a bearish count is playing out. That's because the drop and sideways action is consistent with a continuing wave v within this diagonal or with the wave (iv) correction shown on the short term bullish count below.

Obviously, for this count to remain valid, we need to stay below the high at 1157.16.

Turning to the more bullish count, you can see the bigger picture of the one that I'm now following on the first chart in the pre-market post (click here).  Here's the close up (the labelling on this chart relates to Option 3 on the 60 min counts page): 

Chart 3: SPX 1 min - 5 waves up from August still in progress, close up:

As explained in the update I posted earlier (see here) I have to assume that we're still in wave (iv) and that it did not end at 1136.08 as originally labelled.

As you can see, I've labelled a potential zig zag, but the alternative is a triangle as shown by the red dotted lines. The latter would entail less downside to complete wave (iv) than the former (it can't take out 1136.08 in the e wave if its a triangle).

The problem with this bullish count is that its not invalidated unless we take out 1065.21 in an assumed wave (iv). However, as explained in the pre-market post of this count, if I see a strong impulsive decline that takes out 1091.15, I'd really start to doubt this count. 

So, the levels I'm watching for some sort of confirmation of an end to the rally from the August low at 1157.16 are 1132.09, 1122.79. To the upside, we have to stay below the current high at 1157.16.

Have a great weekend!

19:31 BST - Correct chart inserted in the last post

Sorry if I confused anyone - I've replaced the first chart in the previous post with the correct one for the bearish count (I originally put the bullish chart in where the bearish chart should have gone).

19:19 BST - SPX Update on the bullish and bearish counts

For the bearish count, this is what I have to go with at the moment:

SPX 1 min - top in at 1157.16:

I'm still looking at 1149.59 as the invalidation point, but  if that gets taken out, we could still be in wave [2] provided we stay below1157.16. 

For the short term bullish count shown in the pre-market post (see here) I'd have to assume we're still in wave (iv) since there doesn't seem to be a compelling impulsive move to the upside from where I had labelled wave (iv) at 1136.08, other than one which looks best as part of an on-going correction:

SPX 1 min - waves (iv) and (v) still in progress:

15:39 BST - SPX Update on the bearish count

On the bearish count of an ending diagonal complete at yesterday's high, I think we may have seen a double zig zag from yesterday's low, with a truncation in the C wave of the second zig zag:

SPX 1 min [1]-[2] down from 1157.16:

So, the end of wave [2] is at 1149.59 which means that we shouldn't now get back above that high if this is the correct count. I'd start to feel more confident in this if we take out 1136.08 and do it swiftly with a clear impulse down. If we take out that high, then this count will need to be reassessed.

12:53 BST - SPX : Update on the short term bullish count

As I mentioned in yesterday's end of day update, I'm not that keen on the bullish count shown in charts 3 and 4 in that update, consisting as it does of a number of ones and twos to the upside. Even if the alternate labelling is applied, with wave (iv) at 1132.09, it still doesn't look great in my view. So, I'm looking at this as a possibility, where the ending diagonal I've been showing on the bearish count (see charts 1 and 2 in that update) was actually the end of wave (iii), not wave (v) up from the August low. 

Here's a 60 min chart for a larger view (labelled as if Option 3 from the 60 min counts page is playing out):

SPX 60 min - waves (iv) and (v) up still in progress:

As I mentioned in one of the intra day updates yesterday, the initial move down from yesterday's high to 1148.82 looked very much like a double zig zag rather than 5 waves for an impulse, so it wouldn't surprise me to find that it was just part of the wave (iv) correction shown on the above chart. I'd actually count the move from the high to the 3 wave low down to 1151.37 as a zig zag, then a running triangle x wave ending at 1151.75, followed by another zig zag for wave y.

Here's a closer look from the wave iii of (iii) high at 1127.36 (though you can't really see the detail of wave (iv) on this chart):

SPX 1 min - waves (iv) and (v) up still in progress, close up:

If this count is correct, then, by reference to wave (i), if wave (iv) bottomed at 1136.08, wave (v) would be equal at 1161. It would be a 1.236 extension at 1167, 1.382 x (i) at 1171 and 1.618 x (i) at 1177. If wave (iv) hasn't yet ended, then these potential targets will need adjustment.

The counts shown on  charts 3 and 4 in yesterday's end of day update have invalidation points at 1132.09 (for the alternate with wave (iv) at 1132.09) and 1122.79 (for the main count). The count above would survive a drop below those levels and isn't tecnichally invalidated unless we drop below 1065.21.

Remember that the bearish count shown in charts 1 and 2 of that end of day update carries the risk of a further high in a continuing wave v of the diagonal as long as we remain above 1132.09. That new high would, however, be limited to 1159.22 since wave v has to remain shorter than wave iii. If we rally and exceed that level then the count shown in this post will become my favoured short term bullish count.

To start to disregard this count, if we've seen waves [1] and [2] down from the low (as shown in charts 1 and 2 in the end of day update, with [2] possibly still needing more upside as described in that update)  I'd want to see a significant decline in waves [3], [4] and [5], preferably taking out the pivot low at 1091.15. Even though that wouldn't technically invalidate counting wave (iv) in progress, it would start to make it look unlikely in my view.

21:17 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm  looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

It may be that we have a good candidate for a top at today's new high for the rally from the August low at 1157.16. This is based on the ending diagonal I've been showing.

Here it is on the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

Here's a closer look: 

Chart 2: SPX 1 min - 5 waves up from the August low close up:

We had what may reasonably be counted as a 5 wave decline from the high at 1157.16 and the move up from there appears to be 3 waves.

If this is correct, I want to now see an impulsive move down that takes out the low at 1132.09 and the low at 1122.79. As explained in my earlier post, taking out the first level will preclude a further high to come in wave v of the diagonal that I've labelled on the above charts. Taking out the second level will start to make the bullish case look doubtful (though it won't be invalidated).

Its possible that wave [2] still has further upside - so far we've retraced about 50% of the decline from the high. The move down from where I've labelled wave [2] doesn't look impulsive at the moment, so we could still be in the (B) wave.  If so, it may well try to get to the 61.8% level at about 1149 before its done. A 5 wave decline below 1136.08 will mean that wave[2] should be over. 

To the upside, we obviously need to stay below the high at 1157.16.

Turning to the more bullish counts, here's the bigger picture (the labelling on these charts relate to Option 3): 

Chart 3: SPX 1 min - 5 waves up from August still in progress:

This is beginning to look unlikely as far as starting wave (v) up is concerned. However it can't really be ruled out. If we take out 1132.09, that will eliminate the i-ii-[1]-[2] and the possibility that wave (iv) ended at 1132.09, but still leaves the possibility that we're in a i-ii from the 1122.79 low.  If we take out 1122.79, that will eliminate the i-ii count for the start of wave (v) up, but won't rule out the possibility that we're still in wave (iv). I have the high of wave (i) on this count at 1065.21, and that's what will rule out a continuing wave (iv) as far as elliott wave is concerned.

Here's a close up:

Chart 4: SPX 1 min - 5 waves up still in progress, close up:

You can see even more clearly at this scale why I think this count, showing the start of wave (v) up at 1122.79, seems unlikely, with all the ones and twos in there. 

You can also see that if we take out 1136.08,  the blue (1)-(2) will be eliminated. Then, as mentioned above, the next levels to watch are 1132.09 and 1122.79.

The possible diagonal I've sketched in suggests a top has been put in  at 1157.16 even on this count. Still, I want to see the levels mentioned above taken out to gain greater confidence in this.

So, the levels I'm watching for some sort of confirmation of an end to the rally from the August low at 1157.16 are 1136.08, 1132.09, 1122.79. To the upside,we have to stay below the current high at 1157.16.

17:08 BST - SPX update on the ending diagonal

This is the chart from earlier, updated with the subsequent price action:

SPX 1 min - ending diagonal complete at 1157.16?

Taking out 1141.02 has confirmed that a diagonal with the alternate labelling as shown on the chart in the previous post is complete at today's high.

However, if its the diagonal shown above (this was the main labelling on the chart in the previous post) that is playing out, we have to take out the low at 1132.09 to preclude further upside in wave v.

I've tentatively labelled an impulse wave down from today's high, but wave (1) looks more like a double zig zag - I've labelled a running flat wave 2 within wave (1) to make it an impulse, so its not entirely satisfactory.

What I want to see now is the low at 1132.09 get taken out. If we take that out, the diagonal shown in the above chart would, I think, have to be complete since wave v, which could still be in progress otherwise, would no longer be a zig zag type wave if that low is taken out.

Until 1132.09 goes, the above diagonal carries the risk of further upside (to a maximum of 1159.22).

 

16:26 BST - Dollar Update

On the overall bullish count which has us currently in a wave (2) decline in the dollar, we've just about reached the 78.6% retracement of the decline from the June high and the point where wave C is .618 x wave A:

Dollar 80 min from June 2010 high:

Coupled with the above, there's a not unreasonable count for a complete 5 waves down from the high labelled B. Here's a closer look:

Dollar 60 min from B wave high at 83.522:

However, remember, the trend is firmly down. Until we see something clearly impulsive to the upside, the risk of further declines remains - we may have more to go in wave (v) of [v] of C or, perhaps we may only have seen the first wave of wave [v] within C, for example. The latter isn't ruled out until we take out the wave [iv] high at 80.259.

So, the low at 78.414 is critical to this labelling showing wave C of (2) as complete and the labelling has to be tentative until we see some price action that is decidely bullish (don't forget, there are more bearish potential counts - see the dollar page).

 

15:08 BST - SPX Update onthe ending diagonal

So, 1150 wasn't the top of the rally from the August low. However, on the ending diagonal count, one of the alternatives was that we were still in wave v (see yesterday's end of day update). If that's the case, we may have seen it complete today - its invalidation point was 1159.22:

SPX 1 min - ending diagonal close up:

If the alternate is playing out, with wave iv at 1141.02, then the invalidation point is at 1168.23. Needless to say (but I will), until we see a decisively impulsive decline, the risk remains to the upside as always. If we take out 1141.02 without making a new high, I might have more confidence in this labelling.

10:28 BST - SPX - 60 min time and price chart

I've continued to watch this 60 min time and price chart with interest:

SPX 60 min time and price chart:

When I posted it on Tuesday (see here) I noted how price had crawled up the mid line of the channel after the big gap up on Friday, fallen away from it and then tried to get back to it but failed, suggesting some weakness.

You can see that following this, we saw price drop out of the channel, but it then did what I didn't want to see it do if we had seen a top to the rally from the August low - it got back into the channel and we duly made a new high.

However, its interesting that we didn't get near the mid line of the channel with this new high at 1150 and after making that high, we fell back out of the channel and then spent most of yesterday crawling up the lower line of the channel, trying to get back within it. The failure to do so continues to suggest weakness and, as you can see, we continue to see the indicators seemingly confirming this weakness.

Also of interest is the striking similarity between the current move and the move into the early August high - I've highlighted the two areas in yellow. The current move seems to be a smaller version of the August top. Well, this is interesting but probably has no predictive value. Just thought I'd point it out.

Still, the current move, is displaying the same indicator divergences that we saw into the August top, so may be indicative of a topping process going on.

None of this precludes further highs, so we just have to continue to watch price action and look for confirmation in the indicators. I explained in the previous post what I would want to see in price and indicator action to provide a degree of confidence that some sort of top has been put in. Although we closed below the channel yesterday, I don't think it can yet be considered as a significant breach. We need now to see downside follow through if a top has been put in.

However, if price gets back into the channel, then its going to be a warning that we may see further highs before this rally is over. It could be limited if price again fails to make it to the mid line of the channel, so it would be sensible to monitor any move back into the channel to try to gauge the strength of the move. 

As I pointed out prior to Friday's move, price could move up into the next Gann price levels (1156 then 1170) by just crawling up the mid ine (or, indeed, the lower line) of the channel. If that's what it does, again, I'd be looking at that as a sign of weakness.

Of course, if it gets back into the channel and then gets above the mid line, then all short bets should be off.

 

21:22 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

We stayed below the high at 1150, so the potential ending diagonal that I posted in yesterday's end of day update and updated earlier, remains valid. 

Here it is on the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

For this labelling to remain valid we need to stay below the high that I've labelled (2), which is at 1148.63. A move above that would suggest that we are likely to take out the high at 1150, perhaps in one of the alternatives within this diagonal that I set out in my earlier post or on one of the more bullish counts (see below).

Here's a closer look at the diagonal: 

 

Chart 2: SPX 1 min - 5 waves up from the August low close up:

You can see one of the alternatives for the diagonal labelled on this chart, namely, that 1150 was only the end of wave iii and we're now in wave iv. To preclude this, I want to see 1122.79 taken out and/or the dotted line reached. Once we have a wave iv low for this alternative, the limit for wave v would be 27.21 points from that low since wave v must be shorter than wave iii.

The other possibility I mentioned in the earlier post is that we're still in wave v of the diagonal, so 1150 would have been wave [W] of v and we'd now be in wave [X] of v. This would be invalidated if we drop below 1132.09 since that would prevent wave v being a (double) zig zag, which all waves in an ending diagonal need to be. We'd have to remain below 1159.22 in wave v since it has to be shorter than wave iii. If we take that level out, I'd be looking to one of the more bullish counts.

Turning to the more bullish counts, here's the bigger picture: 

Chart 3: SPX 1 min - 5 waves up from August still in progress:

And here's a close up:

Chart 4: SPX 1 min - 5 waves up still in progress, close up:

Here, I think that taking out 1140.26 would start to cast doubt on this count. If we take out 1132.09, I'd be even more doubtful. Taking out 1122.79 would probably put it to bed, though I don't think we can rule out that we are still in wave (iv), so I'd want to see an impulsive move down and a very significant drop below 1122.79 to start thinking about discarding that possibility.

The possible diagonal I've sketched in would suggest more limited upside than the ones and twos labelled. It may be something to keep an eye on, but below 1132.09 it will be invalidated.

So, the levels I'm watching for some sort of confirmation of an end to the rally from the August low are 1140.26, 1132.09, 1122.79. To the upside, if we take out 1148.63, its likely we'll move above the 1150 high. If we're still in an ending diagonal shown in charts 1 and 2 above, the highest we could go is 1159.22. Above that and the bullish counts in charts 3 and 4 will become the focus.

15:53 BST - SPX Update on the potential ending diagonal to complete 5 waves up from the August low

This is a close up of chart 3 from yesterday's end of day update showing the possible ending diagonal for the final 5th wave up from the August low:

SPX 1 min - ending diagonal 5th wave to complete 5 waves up from August low, close up:

As shown by the main labels, we may have completed the diagonal at 1150. Its also possible however, that we're still completing wave v. In that case, we have to stay above 1132.09 to retain a zig zag count for wave v and we have to stay below 1159.22 for wave v to be shorter than wave iii.

However, you can see that the alternate labelling labels the high at 1150 as wave iii, with wave iv now in progress. If that's correct, wave iv has to stay above that dotted line and/or 1122.79. 

Another possibility would be that wave iii is still in progress.  Again, to retain a zig zag count for wave iii, it would then have to stay above 1132.09. To remain shorter than wave i , wave iii would have to stay below 1152.50.

So, these are the possibilities on this potential ending diagonal count. Bear in mind that the more bullish counts shown in charts 1 and 2 in yesterday's end of day update still stand (except the small ending diagonal in chart 2), albeit with some labelling adjustment. I wouldn't rule them out until we take out 1122.79.

21:43 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

Taking out the high at 1149.92 means that the count in the chart I posted earlier, or some variation of it, looking for further upside is playing out. The question is how much further upside.

Here's the bigger picture for the move up from the August low (labelled as if Option 3 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

If wave (iv) is correctly placed at the 1122.79 low, then there could be a good deal of potential upside to come, though if the diagonal possibility I mentioned when I posted this chart earlier is playing out, it may be more limited.

You'll see I've got an alternate labelling for wave (iv) at the 1132.09 low. Even on this labelling, however, the upside could be substantial.

For these counts, they really need to stay above the wave [2] low at 1141.22. Taking it out would cast doubt on them. Taking out the low at 1132.09 would seriously call the main labelled count into question and would invalidate the alternate labelled count. Taking out the low at 1122.79 would invalidate the main labelled count altogether.

If 1132.09 is the wave (iv) low its possible that we might be seeing an ending diagonal form from there which may have less upside potential. Here's that possibility on a close up chart from the 1122.79 low (this chart is labelled as if Option 1 is playing out):

Chart 2: SPX 1 min - 5 waves up from the August low close up: 

You can see the potential diagonal shown by the green lines. I've put on tentative labels for the diagonal, but we may only have seen the 1st wave rather than waves i, ii and iii of it. If we did complete wave iii at today's high, then wave iv must stay above the dotted green line, otherwise, the diagonal that I've drawn in is off the table. 

Having said all of that, there is a count that may have a top in at today's high or not too far above, as shown on the following chart: 

Chart 3: SPX 1 min - top of 5 waves from August low in at 1150:

 

 

Taking out 1132.09 would give some credence to this count. 

 

So, the levels I'm watching are now 1141.22, 1132.09 and 1122.79.

19:23 BST - SPX Update: Last chance for the immediately bearish count

Its now an 88.6% retracement, so it had better start dropping now if this labelled count is to survive:

SPX 1 min - (1)-(2) down from 1149.92 - last chance:

Taking out that B wave low at 1142.47 might be the first encouraging sign, though not conclusive, that this count might be playing out, but it has to be done in an impulsive manner. Until then, I'd expect more upside, perhaps in the count shown in my last post.

17:57 BST - SPX Update: Do we still have more upside to come before 5 waves from the August low are complete?

If we don't start showing some impulsive downward action soon, I'm going to start thinking that this count (shown on a close up of Option 3 - see the 60 min counts page) for 5 waves up from the August low may be playing out:

SPX 1 min - 5 waves up from August low still in progress?:

If we take out the high at 1149.92, then it becomes the most likely count. Whether wave (v) will form as an impulse or as a diagonal, we'll have to wait and see, but a diagonal would be a possibility, with the 1st wave ending at 1149.92 instead of where I've placed it. 

So, this is something to keep in mind as we fail to make any downside progress.

16:44 BST - SPX Update: (1)-(2) down from 1149.92? Jury's still out

Its a much deeper retracement than I would have liked for this wave - 78.6%. The way I've labelled it, Y=W. If its wave (2) in a new downtrend, then it needs to start falling now or there's a clear risk that we're going to take out yesterday's high and invalidate the labelled count:

SPX 1 min - (1)-(2) down from 1149.92?:

15:17 BST - SPX Update: 5 waves down from 1149.92?

Its possible that we've now seen 5 waves down from yesterday's high. Here it is on chart 2 from yesterday's end of day update:

SPX 1 min - 5 waves down from 1149.92 complete?:

I can't be sure its the end of 5 waves down, but its right at the top of Friday's gap up, so it could be and we might see support come in here, so its a logical place to be on the look out for a low. If things are really weak, we could just continue to fall and fill the gap.

However, you get the idea and whether its bottomed where I've labelled it or there's more to go to the downside first, once we have completed wave (1), then the bounce is going to be critical - obviously, we have to stay below 1149.92 for the labelling shown on this chart to remain valid. Preferably, the retracement will stay between the 50%-61.8% retracement levels, though we know a 2nd wave can retrace more. The deeper it retraces the more doubt that will create that an end to the rally from the August low ended yesterday.

8:22 BST - SPX Update: 60 min time and price chart - early signs of a top, but price and indicators now need to confirm

When I last posted this time and price chart, SPX had broken down into the lower half of the price channel for the first time since the rally that started at the end of August - see last Thursday's post here. To me, this  was an inital sign of weakness creeping into the rally. 

It actually broke down out of the channel at the end of Thursday, though didn't close outside of it. As you can see from the updated chart, Friday's rally took it back up to the mid line of the channel and it duly spent the rest of the day crawling along the underside of the mid line, which was a possibility I mentioned in that post. An inability to get over the mid line would, as I mentioned, also be a sign of potential weakness, perhaps suggesting that an end to the rally would be close:

SPX 60 min time and price chart:

Yesterday, it fell away from the mid line and the rally into the day's high failed to reach it. This looks bearish, coupled with the divergences that I've marked in the indicators between the high in price made on Friday and yesterday's high (along with the larger divergences between yesterday's high and that of 21 Sept).

Still, the RSI and CCI continue to remain at bullish (to neutral in the case of RSI) levels. If we've seen the end of the rally from the August low then I want to see these indicators turn decisively bearish along with a significant decline in price. For RSI that means falling to the 30 level. For CCI that means falling at least to the zero line, but better still, below it and towards the -100 line.

The MACD histogram has turmed slightly negative which means that the MACD itself has had a bearish cross. However, the latter is still above the zero line. It needs to drop below that line to confirm any bearish move in price.

The stochastic has had a bearish cross, but remains in the overbought zone. We need to see it fall quickly to the 50 line at least, with a good decline in price.

You can see that we're coming into the next time line today, so it would be a good area for price to confirm a top to the rally from the August low, even though it has not quite hit the next price level at 1156. If we have seen a top, then price should fall decisively below the channel and not be able to recover it and we should start seeing the downward price levels (in red) get hit. Moves in the indicators as described above that accompany such a price move would help confirm that perhaps a top to the rally is in.

If we don't see all or any of the above, then it'll be a warning to be prepared for more upside. In particular, I don't want to see price decline but the indicators fail to reach their respective bearish/oversold levels, or price go sideways, but the indicators reach their respective bearish/oversold levels. Those combinations of price/indicator behaviour would be potentially bullish in my view. And, of course, if the channel gets broken to the downside, I don't want to see price recover back inside it.

21:16 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for 5 waves up from the August low to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context (the following charts are based on the bearish count shown in Option 1on that page).

Here's the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

Chart 1: SPX 1 min - 5 waves up from the August low:

Here's a closer look at the action from the wave iv of (v) low:

Chart 2: SPX 1 min - 5 waves up from the August low close up:

I've kept the count in the last intra day post showing 5 waves into today's high at 1149.92.  As I said on Friday, its always going to be difficult to label a wave that shoots straight up and then chops sideways. As I've been saying in the intra day updates, until we see something that is decidely impulsive to the downside, the trend remains up. So, we can attempt to place labels on the move with a view to identifying a potential top, but ultimately, the first indication will be wave behaviour consistent with a top. 

As you can see, I've labelled what may be the start of an impulse move down from today's high. Its certainly more promising than anything else we've seen over the past couple of days and I like the fact that its taken out the low I had labelled as wave [4] of v and moved into the price void created by Friday's move up.

Still, we need to see more - once 5 waves down is complete, for wave (1) on my labelling (as you can see, I've labelled a complete wave (1) as  a possibility),  the retracement in wave (2) will have to stay below the high at 1149.92, obviously. 

 

If it can do that, we need to then see another 5 wave impulse down for wave (3) that is clearly stronger than wave (1) and moves decisively below wave (1) and deeper into the price void created by that straight line move up on Friday. It would be nice if this wave (3) could take out the low at 1122.79, but it may be asking too much. However, what will be critical is that once wave (3) ends, the assumed wave (4) retracement stays below the low of wave (1).

So, there's a wide range to watch - 1149.92 to the upside and 1122.79 to the downside - Friday's move means there aren't really any reference points before that low. However, as this wave down develops, (assuming it does and its not just part of a corrective move prior to further upside) other reference points will be created that can be used to assess whether or not this move down is likely to continue.

19:54 BST - SPX Update: Still waiting for impulsive action to the downside to confirm the end of 5 waves up from August

With the lack of real impulsive downside movement, the trend remains up and the risk that 1148.90 wasn't the end of 5 waves up from the August low played out. Here's a count showing 5 waves into today's high:

SPX 1 min - 5 waves up from August lows complete?:
 

However, until something impulsive happens to the downside, this can just continue grinding up. A 5 wave move that takes out the low I've labelled as wave [4] of v at 1143.73 would be a start.

17:24 BST - SPX Update: (1)-(2)-1-2 down from 1148.90?

Referring to my earlier post, we managed to stay below 1148.90 and appear to have made another 5 waves down:

SPX 1 min - top of 5 waves from August lows?:

However, there's a high risk that 1148.90 was only [3] of v and that what we've seen since is [4] of v, as mentioned in the last post. Until we see something convincingly impulsive to the downside, I think this risk remains.

15:31 BST - SPX Update: Possible end to 5 waves up from August - 1148.90 must hold

This is chart 2 from Friday's end of day update brought up to date with today's action so far. Its possible that 5 waves up from August ended with the ending diagonal shown on Friday:

SPX 1 min - 5 waves up complete?:

Here's a closer look from the wave iv of [5] low of 1122.79:

SPX 1 min - top of 5 waves from August at 1148.90?:

You can see its possible to count 5 waves down from Friday's high. However, its tentative. We now need to see any retracement stay below 1148.90 and form in only 3 waves. Otherwise, this labelling will be invalidated and what we probably saw will only have been the end of wave [3] of v as an ending diagonal.