11:12 BST - SPX: links to the charts in the previous post below

If you're getting server errors when trying to view the 60 or 15 min charts in the post below, you can view them on my screencast page:

Click here for the 60 min chart

Click here for the 15 min chart

10:26 BST - SPX Update: The technical picture on the 60 and 15 min charts - setting up to diverge again on a new price low?

The 60 and 15 min charts are suggesting more downside to come, but also that we may see bullish divergences between price and the technical indicators on any new price low. This would be consistent with the main bearish elliott wave count which has us likely in wave [5] of iii down from the 1129.24 high (see yesterday's end of day update). So, any new low below 1039.83 today would be wave [5] of iii of and once that's complete we 'd expect to see a bounce in wave iv:

SPX 60 min:

The notes on this chart tell the story that the indicators and price seem to be conveying to us (you can see the last post on this chart here).

I really like the way that the RSI was unable to get above 50, and the CCI was unable to get above -100, despite the size of the rally from the 1039.83 low. I also like the way that the MACD came back up to test the broken green trend line from below and appears to be failing there - all occuring below the zero line. All of this seems to confirm that the rallies have been countertrend (even though they may not seem like it).

However, you can see from the notes on the chart that we could be setting up for bullish divergences in these indicators against any new low in price. That would be consistent with the main bearish count where I'm expecting a wave [5] of iii low and then a rally in wave iv. That would be in line with my reading of the behaviour of the -DI line making lower peaks, and the ADX line now moving more sideways than up while the -DI is above the +DI. That's consistent with a weakening in the downtrend.

SPX 15 min:

The 15 min chart  (you can see the last post on this here) paints a similar picture - its always good when different timeframes line up.

Again, the warning signs of a potential low of some sort are building - the directional movement indicator is probably doing this most prominently at this stage, with the lower peaks in the -DI and the ADX.

The blue pitchfork that I drew in off yesterday's high may have gained some validity with that late rally testing its upper line and failing there, but we need to see more confirmation that this may be an important fork to watch by seeing price drop to its median line (taking it out of the green fork).

Although I've said above that these charts are consistent with what is expected on the main bearish count, its important to be aware that its also all consistent with a potentially more significant low being formed on the bullish counts. You can see details of these counts on the first three charts in the end of day update from 25 August.

On those counts, any new low below 1039.83 would mark the end of the corrective moves down from the 1129.24 high so the next move up would be the start of a significant rally if any of those counts is actually playing out.

We should get a clue as to whether or not we're seeing something other than a countertrend rally following any new low today, by watching the behaviour of the technical indicators as price rallies. On countertrend rallies, the indicators should behave in the way I've described in the charts above and in the previous postings of them. Its not conclusive and different timeframes can give conflicting views, but if the indicators start to behave more bullishly, especially if we see this across timeframes, then its a warning that the bearish counts may be under threat.

Of course, if we don't get the divergences that appear to be setting up, and the indicators instead just confirm any new price lows, then things may be rather more bearish than the main count suggests.

21:13 BST - SPX End of Day Update

So far, the main bearish count has lived to fight another day. However,  that doesn't make it right since none of the other counts, of varying  degrees of bullishness, have been eliminated as yet (you'll need to read the 60 min counts page if you want to see the context of the following charts and to understand the reference to the Options mentioned on that page).

I showed the charts of the three (potentially) very bullish counts in yesterday's end of day update, so won't post them all again. Suffice it to say that the counts shown in that update still stand and will do so until 1010.91 is taken out. You can read that update by clicking here.

Turning to the bearish counts, and using the degrees applicable to Option 2, the main bearish count remains that we are in a i-ii-[1]-[2] down from 1129.24 and completed wave [3] in that sequence at 1039.83. Yesterday's move off that low and into today's high is counted as wave [4] of iii and we would now be in wave [5] of iii. Here's the view of the count from the 1129.24 high:

SPX 1 min - from 1129.24:

Here's a close up of it from the wave [2] of iii high at 1081.58:

SPX 1 min close up:

So, from today's high, we have what looks like a good start to wave [5] of iii down. But its not conclusive that this is the correct count.

Since we remain above the low of 1039.83, the moderately bullish alternative counts for this overall bearish count remain intact.

The first of those is the one you can see on the first chart above which assumes that we are still in wave ii and have not yet started wave iii. The low at 1039.83 would be wave [B] of ii in an expanded flat. Currently, the move down from 1100.14 can be counted as a zig zag for wave [B]. This would mean a substantial rally would now take place in wave [C] of ii, likely to above 1100.14.

As shown in yesterday's end of day update, there are other counts which might be playing out which would involve more upside before we start a major decline. Theses are shown on the following chart:

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

If the 1039.83 low was wave [1] of iii then we will now be retracing up in wave [2] but we can't exceed the high at 1100.14, otherwise, this count is invalidated.

If 1039.83  was only wave i, then we could, in theory, retrace all the way back up to 1129.24 without invalidating the count. However, as explained in prior updates, we'd probably be more likely to see a 50%-61.8% retracement (and preferably the lower end of that) given that the larger count has us in wave [iii] down.

So, having stayed below 1063.91 on the move up from 1039.83,  there's a good chance that the main bearish count could be the one that is playing out. 

However, if, before making a new low below 1039.83, we were to rally up and take out 1063.91, invalidating the main bearish count,  then the logic of elliott wave remains as set out yesterday:

1) the next count to look at would be the  i-ii-[1] which is the main count on the third chart above That would remain valid unless we  take out the high at 1100.14;

2) if we take out that level, then we may be in the expanded flat for wave ii shown as an alternate on the  first chart above, of the main bearish count, or the count that has us having only completed wave i down from 1129.24 (the alternate shown on the third chart above),  or one of the more bullish counts (see yesterday's end of day update);

3) if we take out 1129.14, that will eliminate those two remaining bearish counts for the move down from that high, but the first bullish count (see yesterday's end of day update) is, you'll recall, 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 which were summarised in yesterday's end of day update.

It should be said that for the main bearish count, we obviously need to see 1039.83 taken out. However, taking out that level doesn't guarantee that its that count that is playing out. 

One thing I'm looking at is the lack of acceleration down in this move from 1099.77, which I'm labelling as a 3rd wave. Its not really any steeper than the 1st wave of the same degree which is the wave down to 1069.49. Also, we haven't broken the channel you can see on the first chart above - as you can see from my note on that chart, the 3rd wave should have done so.

Maybe we will see that acceleration occur in this wave [5] of iii. But if not, I think the wave behaviour starts to favour one of the other three counts shown above which don't count that section of the move down as a 3rd wave (I'm assuming that the overall bearish counts are playing out and ignoring the more bullish counts for the moment). This is just something to bear in mind. It may be sensible to just let the market rule out the main bearish count either as described above or,  if we make a new low for wave [5] of iii, on the wave iv retracement which would have to stay below 1069.49 for this count to remain valid.

19:22 BST - SPX Update: 1 min close up

This would be the way I'd count this action for the bearish case, but on the slightly more bullish case (shown here) where the decline from today's high is wave (B) in a zig zag, it would, currently, be a zig zag for wave (B). If we can make a clear 5 waves down and take out 1039.83, that would certainly increase confidence in the main bear count:

SPX 1 min close up:

As long as we stay above 1039.83, the risk of more upside remains.

16:55 BST - SPX Update: 60 min chart

There are signs of this rally failing at price and pitchfork resistance on the 60 min chart. The behaviour of the indicators so far seems largely consistent with a countertrend rally:

SPX 60 min:

16:47 BST - SPX Update: 15 min chart

There are some bearish signs appearing on the 15 min chart, but as explained on the chart, we probably need to see more to gain confidence that the next leg down may have started as per the main bearish count:

SPX 15 min:

16:23 BST - SPX Update: Watch out, this may be wave (B) on the alternate counts , with (C) up next

With the count for a top on the main bearish count, we have to be careful here because on the alternate counts for the decline from 1029.24, we've retraced 38.2% of what I have as wave (A) in a zig zag for wave [2] (or ii). Since it looks like 3 waves down from today's high, this could be wave (B). So, we could now be headed up for wave (C) if one of those slightly more bullish counts is actually correct:

SPX 1 min - alternate counts for the decline form 1129.24:

15:55 BST - SPX Update: 1 min close up: Top for wave [4] on the main bearish count - take 2

Well, the ending diagonal was invalidated, but the main count is hanging in there. So, with some re-labelling, here's a count for a top on this one - again, watch the invalidation point (1063.91) since those slightly more bullish and very bullish counts I showed in yesterday's end of day update remain on the table and this count could get invalidated very quickly. I'm concentrating on this one for the moment because its the one that has to top very soon to stay in play and its a good risk reward at these levels:

SPX 1 min close up:

The wave labelled v in the diagonal may have another up leg to go,  but taking out 1055.38 would mean it should be over. If we can take out 1055.38 (the low of wave ii in the diagonal) that would strengthen this count. While that level holds, we're at risk of more upside, so waiting for that level to break, preferably with a 5 wave move down and a 3 wave retracement, would be a safer play and even safer if we take out 1052.59 in such a 5 wave move.

14:51 BST - SPX Update: 1 min close up: possible top on main bearish count

On the main bearish count, this could count quite nicely as a top if it holds - (Y) is 1.618 x (W). If we take out today's high the ending diagonal can be re-drawn and remain valid, depening on how high it goes, if I keep the A and B of (Y) labels at 1056.40 and 1052.59, which is where I had them in yesterday's end of day update. So, its not a write-off if we do take out today's high, but the risk then is that  we go on to invalidate this count (at 1063.93) which could mean more upside, so tight stops required on any short trade here:

SPX 1 min close up:

12:15 BST - Dollar Page Updated

I've updated the Dollar page - use the menu tab above or click here.

9:42 BST - Dollar Update - Possible top for wave (i) of [i] of minor 3 and what to look out for

Yesterday it looked like the dollar was completing 5 waves up from the low of 80.085 which would be wave (i) of [i] within minor wave 3. You can read yesterday's update here.

In that update I mentioned the possibility that we could still be in wave [4] of v of (i), with a little more downside to come, provided we stayed above the wave [1] high at 82.717. Well, we have seen more downside and so far, we have stayed above that level, so the possibility remains that we are still in wave [4] of v and will see a further rally soon in wave [5].

The other possibility is that yesterday's high at 83.522 was wave [5] of v and wave (i), ending, therefore, with a slight truncation. You can see both of these possibilities on this chart:

Dollar 35 min:

I've labelled the truncated end to wave (i) as the main count only because we've broken the elliott channel for wave v, whereas, ideally, a 4th wave should stay within the channel. However, if we rally up hard back into it, and assuming we haven't first taken out the 82.717 high, it'll look like the alternate labelling of a wave [4] low at today's low is playing out. On the other hand, a rally back up to the broken channel line that gets rejected will increase the odds that we did top at 83.522.

So, I'll be watching price behaviour at that lower channel line and also watching that 82.717 level. 

Taking out that price level should confirm that wave (i) is in and that we'd be seeing a retracement down in wave (ii) now. You can see the retracement levels for wave (ii) assuming wave (i) topped at 83.522. There's an obvious support area at about 81.800 which is in the region of the 50% -61.8% retracment, the low of wave iv of (i) and the high of wave i of (i). If we're in wave (ii) down, I'll be on the lookout for a sign of an end to that wave in that area.

 

21:17 BST - SPX End of Day Update

Well, we got the 5th wave down that we wanted to see from the 1081.58 high. However, exactly what this represents in the context of the move down from 1129.24 remains an open issue. There remain both bullish and bearish counts (you'll need to read the 60 min counts page if you want to see the context of the following charts and to understand the reference to the Options mentioned on that page).

Bullish Counts:

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

This count applies to all the Options shown on the 60 min counts page. It means more upside before the overall bearishness of the counts shown under those Options takes over and pushes the market down.

It wouldn't be ideal if we take out today's low, but if that happens in an extending 5th wave within wave (c) of [b], that's fine. However, it has stay above 1010.91, otherwise the count will be invalidated.

SPX 60 min - first bullish alternate under Option 4: impulse wave from 1010.91:

Again, taking out today's low wouldn't be ideal, but as long as we stay above 1010.91 this count is valid.

SPX 60 min - second bullish alternate under Option 4: leading diagonal from 1010.91:

The comments made under the first two bullish counts apply here too,

In all of these bullish counts, the next move up should be an impulse wave which carries the market above the 1129.24 level and, in the case of the bullish counts relating to Option 4, to new highs above 1219.80.

A lack of impulsive upside action will call these counts into question, though until we fall below 1010.91, they will remain viable.

Bearish counts

The main bearish count remains that we are in a i-ii-[1]-[2] down from 1129.24 and completed wave [3] in that sequence at today's low:

SPX 1 min - from 1129.24:

On the basis of this count, we're seeing wave [4] of iii play out at the moment. That being the case, we can't take out the low of wave [1] of iii  (at 1063.91) in this wave [4] since that would invalidate the count.

If that were to happen, you can see the alternative count shown on this chart which assumes that we are still in wave ii and have not yet started wave iii. The low today would be wave [B] of ii in an expanded flat. Currently, the move down from 1100.14 can be counted as a zig zag for wave [B]. This would mean a substantial rally would now take place in wave [C] of ii, likely to above 1100.14.

Here's a close up of the main count:

SPX 1 min close up:

Really, we need to start dropping now in wave [5] of iii since there's not too much more room available for wave [4] to move up without invalidating the count.

As shown in yesterday's end of day update, there are other counts which might apply if we do invalidate the first bearish count above. One, the leading diagonal wave (i) down from 1129.24, was invalidated today with the move below 1040.39, but the other two shown in this chart remain valid:

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

Either of these counts look good at the moment. The difference between them is the level of retracement we may see. 

If today's low was wave [1] of iii then we will now be retracing up in wave [2] but we can't exceed the high at 1100.14, otherwise, this count is invalidated.

If today's low was only wave i, then we could, in theory, retrace all the way back up to 1129.24 without invalidating the count. However, as explained in yesterday's end of day update, we'd probably be more likely to see a 50%-61.8% retracement (and preferably the lower end of that) given that the larger count has us in wave [iii] down.

So assuming we made a low today, we need to watch the behaviour of the move up to try to determine which of the above counts may be playing out. If we stay below 1063.91 on this current rally, the chances are that its the main bearish count shown above. 

If not, then the next count that could be excluded is the i-ii-[1], if we take out the high at 1100.14.

If we take out that level, then we may be in the expanded flat for wave ii shown as an alternate on the chart of the main bearish count above, or the count that has us having only completed wave i down from 1129.24, or one of the bullish counts. 

If we take out 1129.14, that will eliminate those two remaining bearish counts for the move down from that high, but the first bullish count is, you'll recall, 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 above.

19:29 BST - SPX Update: 1 min close up: top in or close if we're in wave [4]?

If this is wave [4], although we haven't yet reached the 38.2% retracement, we have filled today's gap down, so its possible we could have topped here or be about to complete a top:

SPX 1 min close up:

Waiting for a 5 wave move down and a 3 wave retracement would be the safer course if you're not into trying to pick tops, however.

17:51 BST - SPX Update: 1 min close up

Its possible that, assuming this is wave [4] of iii, it ended at 1050.22 (its a 23.6% retracement) - I could count the move up to there from today's low as an (A)-(B)-(C) move (wave (C) would have a big 4th wave). However, for the moment I'm labelling the move up from the low as only part of wave [4]:

SPX 1 min close up:

I'd be doubting this count if we take out 1041.62. If the count is right, we could get to the 38.3% retracement level at about 1055 before wave [4] ends.

16:27 BST - SPX Update: 1 min close up

So far, it looks like 3 waves up from the low today. I've labelled it as wave (W)  followed by a wave (X) in anticipation of more upside if we are in wave [4] of iii, but its possible that we're still in wave C of (W):

SPX 1 min close up:

The risk is that today's low was only wave 1 of (5) of [3] and now we are really only in wave 2 of (5) of [3], so that wave (5) of [3] is extending. Since wave [3] ended in the area I mentioned at the end of yesterday's end of day update, I'll stick with the assumption that we're in wave [4] for now. If we take out the B wave low at 1041.62, it'll start looking like the extended 5th wave may be playing out.

15:30 BST - SPX Update: 5 and 15 min charts: bullish divergences indicate conditions in place for a low

Here's the updated 5 min chart I posted earlier (see the earlier post here) which suggested we might see some bullish divergence between the indicators and price on a new low in price today:

SPX 5 min:

And here's the 15 min chart (I've left the comments as they were for the moment):

SPX 15 min:

The divergences show that the technical conditions for at least a short term bottom exist.

It doesn't, however mean that price can't keep falling - it will do if bearishness remains strong. The divergences are just warnings to stay alert for price action that might signal that a low of some sort is in. Its important to await such action because divergences can be eliminated if price continues to move down.

15:15 BST - SPX Update: 1 min close up -

Obviously, if this count is correct, we can't take out today's low, so it could be invalidated quite quickly:

SPX 1 min close up:

If we do have a wave [3] low, the retracement levels are shown. They assume we're only retracing the decline from 1181.58 in wave [4] of iii. This means we can't end above the wave [1] low at 1063.91 (its not visible on this chart but you can see it in the first chart in yesterday's end of day update).

If we take out today's low, the labelling will need re-adjustment - it may be we will be getting an extended wave (5).

14:44 BST - SPX UPdate: 1 min close up - on alert for a possible bottom

Its difficult to tell if this move down is over, but having got the low below 1046.68, we've certainly fulfilled the requirements for the completion of 5 waves down from 1081.58. So, I think we need to at least be on alert for a possible bottom somewhere around here (for what that might mean, see yesterday's end of day update):

SPX 1 min close up:

13:04 BST - Dollar Update - Nearing 5 waves up from 80.085?

The dollar index looks like it may be in wave [5] of v of (i) up from the low at 80.085. You can see from the elliott channel I've drawn in that a possible target for wave v could be the upper line of the channel which is at about 83.780-ish, depending on where wave v hits it. That's also about where wave [5] of v would be about equal to wave [1] and about where wave v would be approximately 1.236 x wave i:

Dollar 30 min:

 

Of course, its possible that wave [4] of v is still playing out, in which case, we'd see more downside before wave [5] kicks in. That's just something we'll have to watch out for.

If we are completing wave [5] and wave v and wave (i), we're going to get a pullback in wave (ii) next which could be steep. We'll just have to wait and see, but the wave count suggests that the next tradeable move could be to the downside.

9:41 BST - SPX Update: Technicals on the daily to 5 min charts

Here's a quick run through the non-elliott wave analysis from the daily to the 5 min timeframes:

SPX Daily:

You can see from the notes on the chart that the indicators look pretty bearish, so not much here to support a serious bullish move at the moment.

We're at an interesting place with regard to the pitchforks. That large green upward fork is at risk. Yesterday's decline took price right down to its lower line, but that's where we bounced. You might recall my 60 min chart from early in yesterday's session that showed price void right down to 1010 and the market was right into that void. Clearly however, traders looking at pitchforks would have been looking at support from the forks, despite the lack of support from prior price congestion so this may have been one reason why the market stopped falling where it did.

SPX 60 min:

Again, you can see from the notes on the chart that the indicators pick up on the bearish theme of the daily chart.

The rebound from yesterday's early low also occurred at an interesting place on this timeframe as far as the forks are concerned - right at the intersection of the lower line of the blue fork and the median line of the red fork.

The rebound took price back to the median line of the blue fork, but that is also the prior pivot low that should have provided support, but that was broken yesterday (lower dotted green line) and price seems to have found resistance there.

In a downtrend, the type of sideways move we saw for most of yesterday builds an area that should provide resistance in the future, provided the downtrend continues (in an uptrend areas of resistance get broken easily). So, provided we break down below the congestion area created yesterday, this congestion should become future resistance to any countertrend rally.  Of course, if we break above it instead of below it, then it should become support and that would potentially be at least short term bullish.

SPX 15 min:

Moving down to this timeframe, while the indicators paint a bearish picture in line with the higher timeframes, it looks  to me like there is potential here for the indicators to diverge bullishly against the next low in price. I've noted this in my comments on the chart. 

This would be in line with the wave counts which suggest that the next low should be a 5th wave of some degree (and what that would mean would differ depending on which wave count is playing out - I explained some of the possibilities in yesterday's end of day update which you can see here) and its on 5th waves that divergences tend to occur.

You can see that I've drawn in a new downward blue fork using yesterday's low and the late afternoon high. If we're going to see a 5th wave down from 1081.58 then we might see price try to get to the median line of this fork and possibly fail, which would be near term bullish. If the 5th wave extends then we could see this fork lead price down to the median line of the larger red fork. If we break up out of this blue fork instead of down and the breakout is not quickly reversed, that could be a bullish sign, so should be considered as at least a warning of more upside to come.

SPX 5 min:

The potential for the indicators to diverge bullishly against price on the next price low is probably more obvious on this timeframe. If the 5th wave that's expected extends, then it may not happen, but I think the possibility is there and is worth watching for.

So, the expectation is for a low below 1046.68 at some point today and before we move above 1069.43 so that we get 5 waves down from 1081.58. This would certianly make the counts look complete even on the three bullish counts I have which you can see summarised here.

If we don't get the new low and instead take out the 1069.43 low (meaning we only had what on the face of it looks like 3 waves down from 1069.43), then something else is happening. 

One possibility is the expanded flat for an on-going wave ii that I've shown as an alternate count over last few days and is shown as the alternate count on the first chart in yesterday's end of day update. If we don't get the expected 5th wave down below 1046.68, the decline from 1100.14 to 1046.68 could count reasonably well as a double zig zag for wave [B]. If that is playing out, we'd expect to see a [C] wave rally to above 1100.14 in wave [C]. We'd have to stay below 1129.24 for this count to remain valid.

Another possibility is the leading diagonal for wave (i) down shown on the third chart in yesterday's end of day update. If that did complete as I've labelled it on that chart, at the low of 1046.68, then we would expect to see a substantial rally in wave (ii) retracing the decline from 1129.24.

So, whether we get the 5th wave that's expected or not, the balance of probabilities suggests that we should see some upside  fairly soon - to what extent will depend on the wave count that is playing out, as explained in yesterday's end of day update. The count shown on the first chart in that update allows for only a very moderate bounce and it could be invalidated quickly on any strength, leaving the other counts shown in the end of day update and in the post on the bullish possibilities to battle it out.