22:12 BST - SPX Update

The Options below are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page.

Options 1, 2, 4 and 5 imply that the rally from the 1 July low is correcting the decline from 1131.23 only, so will  be invalidated above 1131.23. The count on the chart of Option 3 anticipates rather more upside even though it is also a corrective move, since it is correcting the whole decline from 1219.80, not just the decline from 1131.23. 

On the charts of Options 1, 2, 4 and 5 I have labelled a double zig zag count from the 1 July low ay 1010.91.

Its possible that this double zig zag completed at today's high.
If correct, then for Options 1 and 2 we would now be about to start a 3rd of a 3rd wave down at various degrees - both very bearish. For Option 4, we would be about to start wave (iii) of [c] of minor Y down - temporarily bearish. For Option 5, we would be about to start (iii) of [c] of minor Y down - again, temporarily bearish. 


On the count that places us in a 5 wave move off the 1 July low (Option 3), which would be part of a larger correction up,  we seem to be in minute [c] of  minor 2 up.

Here's how things stand after today: 

Option 1 - Wave (ii) of [iii] topped at 1131.23

10 min chart:

Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies that we would be in wave iii of (iii) once the correction of the decline from 1131.23 is complete.

Its possible to count the double zig zag as complete at today's high of 1115.01. At that level, [Y] is about .618 x [W]. Also, within [Y], wave (C) is nearly 1.618 x wave (A). Also, its nearing a .886% retracment of the decline from 1131.23.

If wave ii is not complete, then the level to watch remains 1131.23 on any further rally. Exceeding that level will invalidate the count (though it won't preclude a continuing correction in wave (ii) - see the commentary on the 60 min counts page).

On the downside, the main level to watch is probably 1065.25. If that is taken out, the chances are good that the corrective move is over. Until then, the risk remains that any declines will simply be a precursor to new highs.

Option 2 - Wave [ii] topped at 1131.23

10 min chart:

For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down. The double zig zag up from 1010.91 would be wave (ii) of [iii], so, assuming its complete, we would be about to start wave (iii) of [iii] down.

This is the same labelling as on the chart of Option 1 for the rally from 1 July (although the wave degress are different), so the invalidation point is  the same and the same comments made in respect of that count also apply here.

Option 3 - Ending diagonal complete at 1010.91

10 min chart:

For this Option, 5 waves down from 1131.23 to 1010.91 could be  wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  

It places us now in minute [c] of minor wave 2 up.  

The ending diagonal count shown during the past couple of days was invalidated with the move above 1112.98, so it looks like wave [c] is developing as an impulse. Whether we've completed or are completing wave (iii) or only wave i of (iii), remains open to question.

If we completed wave (iii) today or are about to, any wave (iv) pullback has to stay above 1088.96. If its only wave i of (iii), then we have to stay above 1065.25 on any pullback in wave ii of (iii).


There may actually be another potential ending diagonal that may be forming from the 1056.88 low. This arises because of the way price has moved up and the way momentum is diverging. However, I would have us completing wave (iii) of the ed at today's high or slightly higher, so we need to see if any wave (iv) pullback overlaps with wave (i) of this potential ed. For the moment, its just something to watch - here's the chart with the lines of the potential ed sketched in:

SPX 1 min - wave [c]:

Option 4 - Wave [b] of minor Y within intermediate (X) topped at 1131.23

10 min chart:

For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].

However, as mentioned previously, counting a complete 5 waves down to 1010.91 does bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page. That would put us now in a minor wave A rally and eventually take us to new highs. If wave (X) did end at 1010.91, then the impulse wave I have labelled on the chart of Option 3 would apply here - see the bullish alternate chart for Option 4 on the 60 min counts page.

For the moment, I've assumed we are completing a double zig zag for wave (ii) of [c], if it is not already complete at today's high.

If we take out 1131.23, then the bullish possibility mentioned above is likely to be playing out, assuming Option 4 is the correct count on the bigger picture.

Option 5 - Minor wave X within intermediate wave (X) topped at 1131.23. Now in minor Y down

10 min chart:

On this Option, 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.

This is the same double zig zag shown for Options 1, 2 and 4, so the same invalidation point stated for  options 1, 2 and 4  applies here.

Here is the updated 1 min chart of the double zig zag, showing the count for 5 waves up from the 1065.25 low (this 5 waves would be wave [C] of a second zig zag for Options 1, 2, 4 and 5, or it could be wave i of (iii) or (iii) on the Option 3 chart).

SPX 1 min - from 1065.25:

With today's move, I've relabelled it to show either a complete 5 waves up at today's high, or a sub dividing 3rd wave. 

Based on the above chart, if we take out 1096.38, in an assumed wave 4 of (3) pullback, the sub-dividing wave (3) is out and its likely that we completed 5 waves at today's high. On Options 1, 2, 4 and 5, that should mark the end of the second zig zag and complete the correction of the decline from 1131.23. On Option 3, it could be wave (iii) of [c] or just wave i of (iii) of [c].

If a double zig zag from 1010.91 is complete at today's high, we should start to drop impulsively (because one of the bearish Options (1, 2, 4 or 5 would be playing out). If we don't, the risk remains that there may be more upside to correct the decline from 1219.80, if option 3 is playing out. Or, it increases the chance thatone of the even more bullish possibilities mentioned above and on the 60 min counts page may be at work. 

18:38 BST - SPX Update

The ending diagonal count, as labelled, will be negated if we move above 1112.98 because that would make wave (v) of the diagonal (see highlighted labels) longer than wave (iii).

If that happens, we're probably in one of the other counts shown, either a (i)-(ii)-i up or we're seeing wave (iii) of [c] play out today (you can see the count for 5 waves up from 1065.25 on the second chart posted in my earlier update):

SPX 1 min  - wave [c] of minor 2:

15:46 BST - SPX Update

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Here's how the ending diagonal I showed at the weekend looks now:

SPX 1 min - ending diagonal for [c] of 2:

Taking out the wave (iii) high of the diagonal labelled would be an initial indication that it might be over. The next three levels I've marked on the chart, the wave (iv) low, the wave (ii) low and the 1065.25 level (which would be wave b of (i) in the diagonal), would give even better signals that it may be over.

However, the best sign that the correction is over is still taking out the 1056.88 low, so any short trades above that level need to bear in mind that we could yet have higher highs to come in the (i)-(ii)-i count shown, or the leading diagonal possibility I mentioned at the weekend.

The count for a straight impulse up from 1065.25 for wave [C] of a second zig zag looks like it may need another high if that is the count playing out. Taking out 1104.63 ought to be an initial sign that its already topped, but in this count, the most likely sign of a top would be taking out that wave [B] low at 1065.25. Here's the chart:

SPX 1 min - wace [C] of second zig zag from 1065.25:

16:01 BST - SPX Update: Ending diagonal wave (c) in a zig zag from the July low

In Thursday night's 22:41 BST update, I said that we might be forming an ending diagonal from the 1056.88 low. That could still be the case with Friday's action. The tentative lines I drew in for the diagonal at that early stage have altered, and I've also altered the count for Option 3 from being in wave (v) of [a] to being in wave [c] of 2 (although the former remains possible and could mean alot more upside to come).

Here is the updated chart:

SPX 1 min chart - zig zag from 1 July low:

.

The potential ending diagonal is marked by the red lines and the labelling is highlighted with yellow circles. If wave (iii) of the diagonal is not yet done, the wave (iv) pullback mustn't get to the blue dotted line - that's where the lines would be parallel instead of converging. If we don't make a higher high on Monday (for wave (v) of the diagonal) and then get to that blue dotted line, then I would say that we are in the main count, namley, a (i)-(ii)-i for wave [c]. If we take out the 1065.25 low than that would be invalidated. In that case, we'd probably be in one of the other, more bearish counts. 

Or, perhaps we'll be able to say that we had a rule breaking ending diagonal -  waves (i) and  (ii) of the diagonal would be where I have them for the (i)-(ii)-i count, wave (iii) of the diagonal would be where I have the highlighted wave (i), wave (iv) would be where I have the higlighted wave (ii) and wave (v) would be where I have the highlighted wave (iii). It would be rule breaking because wave (iii) would be longer than wave (i), albeit by about 0.17 points. Would that really rule it out as an ending diagonal? 

If we do make a higher high on Monday, provided it stays below 1112.98, then the diagonal count is still potentially valid. We would need to see a quick reversal back to the start of the diagonal at 1056.88 to gain confidence that it is the correct count.

Note: this single zig zag count could also apply to the bearish Options, 1, 2, 4 and 5, where I currently have double zig zags. Its more likely to be applicable there if wave C is forming an ending diagonal which is nearly complete, given that for those Options, the 1131.23 high is the limit for their corrective waves.

Two bullish possibilities to be aware of with this diagonal:

1) it could be a leading diagonal 1st wave within a 3rd wave up - on the bullish alternative chart of Option 4 posted on the 60 min counts page, you will see that I have a wave [i] and [ii] from the 1 July low. This diagonal could, therefore, be wave (i) of [iii] on that count. We'd have to take out the 1056.88 low to avoid this;

2) using the original count I had for Option 3 where 1099.46 was wave (iii) of [a] and 1056.88 was wave (iv) of [a], the diagonal could be an ending diagonal wave (v) of [a], so, after a wave [b] pullback, we would have further upside in wave [c]. We would need to take out the 1010.91 low to avoid this.

15:14 BST - SPX: Impulse from March 2009 page and Zig Zag from March 2009 page updated

See here and here.

13:48 BST - SPX - Interesting fib stuff (well, I found it interesting)

Here's a chart with some fib stuff that I found quite interesting, even though it may have no predictive value.

The chart is the 60 min chart of Option 1:

Time wise, each down move since the April high has taken about 63 - 67 bars on the 60 min chart. That's about 2 x the fibonacci number 34.

As far as rallies go, the recovery after the flash crash took 36 bars. The wave from the low marked (i) to the high marked (ii) took 145 bars. No obvious relationship, but 145 is just one more than 144 (fib number) and 36 x 4 is 144. The number 4 is considered by some to be an important time factor due to the planet/time relationships (the earth rotates 360 degrees in one day; 24 hours in one day is 1440 minutes; every 4 days, the earth rotates on its axis 1440 degrees).

The wave from the low marked i to Friday has taken 124 bars so far. Perhaps we might see an end to the move up around the 144 bar mark some time on 27/28 July, but it may not extend to a 1:1 relationship. 128 bars would be .886 x 144 -  .886 is the square root of .786. That would suggest a high in the first few hours of trading on Monday, which would be consistent with the chart I showed at the end of last night's update suggesting one more high is needed to complete the double zig zag count for the move up from 1010.91.

Points wise, within the flash crash recovery, wave (a) was about 66 points - fib 34 x 2. The (b) wave was 37 points - just more than fib 34. The (c) wave was 79 points - well, 10 short of fib 89, but 79 is .886 x 89.

Within the wave marked (ii), wave w was 65 points - nearly fib 34 x 2. Wave x was 63 points - nearly fib 34 x 2. wave y was 89 points - fib 89.

Within the latest rally from 1010.91, wave [W] was 89 points - fib 89. Wave [X] was 43 points - about .5 x fib 89 or 2 x fib 21. Wave [Y] is currently 46 points - just over .5 x fib 89. If it extends to 2 x fib 34, that would give us 1124 as a potnetial end point, but at 46 points, its just in excess of .618 x 68. 

As to the declines, the size of each isn't obviously fib related, but wave (i) was just about .886 x wave [i] and wave i is .886 x wave (i).

As to the rallies, wave (ii) was nearly .886 x wave [ii] and wave ii will be .886 x wave [ii] at 1106 (its already equal to wave (ii)).

Of course, none of this means that this count, or any of the bearish counts I have is correct or that any of the fib relationships will play out. For all I know, we have started the next bull market (as my bullish alternative for Option 4 might suggest). All we can do is watch the levels that we consider to be important to try to glean some idea of what is playing out. I identified the levels I'm watching on the various Options I'm following in last night's update (and on the 60 min counts page which I updated today). I'll just add the above to that list of points to watch out for.

10:49 BST - 60 min counts page updated

I've updated the 60 min counts page. I've also given the levels to watch following this week's action.

22:00 BST - SPX Update

The rally from the 1 July low can still be counted as a correction of the decline from 1131.23, as shown in the charts below for Options 1, 2, 4 and 5. These corrective counts, as labelled, would be invalidated above 1131.23, so the count on these charts assumes a limited amount of upside. The count on the chart of Option 3 anticipates rather more upside even though it is also a corrective move, since it is correcting the whole decline from 1219.80, not just the decline from 1131.23. (The Options are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page).

On the counts that imply the rally from the 1 July low is correcting only the decline from 1131.23 (Options 1, 2, 4 and 5) the counts have been revised with today's new rally highs, to show a different double zig zag count from the 1 July low ay 1010.91.

Its possible that this double zig zag completed at today's high, as shown in the chart I posted at 20:06 BST.   

If correct, then for Options 1 and 2 we would now be about to start a 3rd of a 3rd wave down at various degrees - both very bearish. For Option 4, we would be about to start wave (iii) of [c] of minor Y down - temporarily bearish. For Option 5, we would be about to start (iii) of [c] of minor Y down - again, temporarily bearish. 

However, I've posted a chart below showing a count for the move from 1065.25 that anticipates a new high to complete the zig zag, so beware. 

On the count that places us in a 5 wave move off the 1 July low (Option 3), which would be part of a larger correction up,  I've re-labelled it in accordance with the count I showed last night on the 10 min chart. It puts us currently in wave [c] of minor 2 up.

Here's how things stand after today: 

Option 1 - Wave (ii) of [iii] topped at 1131.23

10 min chart:

Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies that we would be in wave iii of (iii) once the correction of the decline from 1131.23 is complete.

Its possible to count the double zig zag as complete at today's high of 1103.73. At that level, [Y] is about .50 x [W]. Also, within [Y], wave (C) is about 1.236 x wave (A). Also, its about a 78.6% retracment of the decline from 1131.23.

If wave ii is not complete, then the level to watch is 1131.23 on any further rally. Exceeding that level will invalidate the count (though it won't preclude a continuing correction in wave (ii) - see the commentary on the 60 min counts page).

On the downside, the main level to watch is probably 1065.25. If that is taken out, the chances are good that the corrective move is over (and it would preclude the i-ii-[1] count shown on the chart of Option 3). Higher levels to watch for earlier potential signals are given at the end of this post.

Option 2 - Wave [ii] topped at 1131.23

10 min chart:

For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down. The double zig zag up from 1010.91 would be wave (ii) of [iii], so, assuming its complete, we would be about to start wave (iii) of [iii] down.

This is the same labelling as on the chart of Option 1 for the rally from 1 July (although the wave degress are different), so the invalidation point is  the same and the same comments made in respect of that count also apply here.

Option 3 - Ending diagonal complete at 1010.91

10 min chart:

For this Option, 5 waves down from 1131.23 to 1010.91 could be  wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  

It places us now in minor wave 2 up.  I've changed the labelling to show wave [a] of minor 2 complete at 1099.46 and so, we would now be in wave [c] up. That wave needs to be a 5 wave impulse or an ending diagonal  (see my post at 22:41 BST last night).  The way it is developing at the moment, it could be forming either a straight impulse which is sub dividing, or an ending diagonal. The latter may have less upside potential.

If we take out the low at 1065.25, the labelling from the [b] wave low will be invalid. It may be that wave [b] is still in progress, or it may be that this Option is not the one that is playing out.

(By the way, if we are in an ending diagonal for [c], I could apply the same a-b-c labelling on the charts of Options 1, 2, 4 and 5 for the move up from 1 July, so we would have a simple a-b-c correction for their 2nd waves on those bearish Options).

Option 4 - Wave [b] of minor Y within intermediate (X) topped at 1131.23

10 min chart:

For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].

However, as mentioned previously, counting a complete 5 waves down to 1010.91 does bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page. That would put us now in a minor wave A rally and eventually take us to new highs. If wave (X) did end at 1010.91, then the impulse wave I have labelled on the chart of Option 3 would apply here, though where I have wave [a] would be wave [i] of minor A

For the moment, I've assumed we are completing a double zig zag for wave (ii) of [c], if it is not already complete at today's high of 1103.73.

If we take out 1131.23, then the bullish possibility mentioned above is likely to be playing out, assuming Option 4 is the correct count on the bigger picture. The downside levels to watch are the same as for Option 1.

Option 5 - Minor wave X within intermediate wave (X) topped at 1131.23. Now in minor Y down

10 min chart:

On this Option, 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.

I've re-labelled this with the same double zig zag shown for Options 1, 2 and 4, so the same invalidation point stated for  options 1, 2 and 4  applies here and the downside levels to watch are the same as stated in respect of Option 1.

Here is the updated 1 min chart of the double zig zag I posted at 20:06 BST. That one showed it as potentially complete at 1103.73. However, with the late drop and rally back up, here is another count that anticipates a further high in order to complete the move: 

SPX 1 min - from 1065.25:

So, a further rally high may be in the works before the double zig zag shown can be counted as complete. Based on the above chart, if we take out the low at 1097.13, its likely that it is complete, but taking out the low at 1087.88 would greatly increase the odds of this beng the case. 

Of course, once a double zig zag from 1010.91 can be counted as complete, we should then start to drop impulsively if one of the bearish Options (1, 2, 4 or 5) is playing out. If we don't, the risk remains that there may be more upside to correct the decline from 1219.80, if option 3 is playing out. Or, it increases the chance thatone of the even more bullish possibilities mentioned above and on the 60 min counts page may be at work. 

Have a great weekend!

20:06 BST - SPX Update

Well, we have a possible top for the double zig zag I posted earlier. Taking out the wave 4 low at 1099.72 would increase the odds that it is complete, though it might be safer to wait for the wave (4) low at 1090.22 to be taken out:

SPX 1 min - complete [C] wave of second zig zag, starting at the 1065.25 low:

 

18:44 BST - SPX Update

The bearish count shown in last night's update has been invalidated with the move above 1099.08, but the alternative double zig zag I showed during the course of yesterday is still on and is only invalidated above 1131.23.

SPX 10 min chart - Option 2:

This chart relates to Option 2 but is the same count for the other bearish Options, namely 1, 4 and 5, but with the degrees of the labels needing adjustment.

Here's the close up on the 1 min chart showing the move from 1065.25:

SPX 1 min chart from 1065.25:

18:24 BST - SPX Update

The stress test spike invalidated the earlier count with a very slight new high, so here's how it appears now (again, both the bearish and bullish counts are on here, dealing only with the rise from 1065.25, so please refer to last night's updates for the context):

SPX 1 min - from 1065.25:

16:20 BST - SPX Update

Here's a possible count from the 1065.25 low - the main labels relate to the bearish Options 1,2,3 and 5, while the alternative labels relate to the bullish Option 3 - please see last night's update for the larger context and invalidation points:

SPX 1 min - count from 1065.25:

13:09 BST - Spx Weekly Pitchforks

This chart might help to understand why we've had such choppy sideways movement  in recent weeks.

SPX Weekly Pitchforks:

The green pitchfork delineates the uptrend from March 2009. You can see that price obeyed the median line of the fork pretty well during the uptrend, which is what its supposed to do. However, the drop from April 2010 has taken it down to the lower line of the fork - the fact that its moved away from the median line is a sign that the trend marked by the fork may be over.

Indeed, a new red fork seems to have been established and price now seems to be oscillating above and below, but mostly below, its median line. The median line should provide resistance to price, if the fork is valid.

There's obviously a battle going on as price tries to stay within the bullish green fork but now has the bearish red fork to contend with. 

With price below the weekly moving averages shown on the chart and all of those averages, except the 50 declining, you would expect the red fork to win out. Price doesn't have to do much to break the green fork and while it can easily just ride the lower line of the green fork up, it has a lot of work to do to get back to the median line to re-assert the uptrend. 

However, the position of the indicators is such that further upward price action isn't out of the question, so the bearish case is by no means certain, though it may be encouraging to the bearish case that the RSI (14) seems to be unable to get above 50 and the CCI (144) has, so far, been unable to get above the zero line, despite some significant rallies.

This may be worth keeping an eye on.

 

22:41 BST - SPX Update

As I mentioned in the update after the close, in respect of the count on the chart of Option 3, I'm a little dubious that wave (v) of [a] is extending in the manner that the labelling suggests. So, looking at the alternatives, maybe we are forming an ending diagonal for wave (v) as shown by the dotted red line on this chart:

SPX 1 min chart - impulse up from 1 July:

The ending diagonal possibility would be eliminated if we drop below the blue dotted line since it would make the lines parallel rather than converging. If it does play out, a target area might be 1109 where this wave (v) would be about 2.618 x wave (i).

Or perhaps we completed wave [a] at 1099.46 and we are now in wave [c], in which case, a subdividing wave wouldn't look out of place. Here's a 10 min chart:

On this count, we still have to stay above 1065.25 for it to remain valid. Taking out 1056.88 would suggest that the count may be wrong, but it may just mean that wave [b] is continuing.

On this count, wave [c] would be equal in size to wave [a] at about 1146.

21:40 BST - SPX Update

On the counts that imply the rally from the 1 July low is a corrective one (Options 1, 2, 4 and 5) I've labelled completed double/single zig zags ending with a truncation at 1099.08, followed by 5 waves down to yesterday's low at 1056.88, with today's high being the end of a corrective rally in the form of a  zig zag (see the chart posted at 20:33 BST for the zig zag count). 

If correct, then for Options 1 and 2 we would now be about to start a 3rd of a 3rd wave down at various degrees - both very bearish. For Option 4, we would be about to start wave (iii) of [c] of minor Y down - temporarily bearish. For Option 5, we would be about to start (iii) of [c] of minor Y down - again, temporarily bearish.   

On the count that places us in a 5 wave move off the 1 July low (Option 3), which would be part of a larger correction up,  I've labelled the high at 1099.46 as wave (iii) followed by  wave (iv) down to yesterday's low at 1056.88. The rally from there is labelled as i-ii-[1] of (v) of [a] up (see the second chart in my post at 16:55 BST).

The Options are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page. 

The question whether the rally from 1 July has completed a corrective move or whether its only all (or maybe, part) of a larger correction up remains to be answered.

Here's how things stand after today: 

Option 1 - Wave (ii) of [iii] topped at 1131.23

15 min chart:

Five waves down from 1131.23 on this Option represents wave i of (iii) of [iii] of minor 1. The double zig zag I have labelled from the 1010.91 low would be wave ii of (iii), so implies that we are now in a wave iii of (iii) decline.

I've labelled a complete 5 wave decline from 1099.08 to 1056.88 to complete wave [1] of iii of (iii) down, followed by a  zig zag to today's high at 1097.50 for wave [2] of iii.

The 1099.08 high remains the invalidation point for the completion of wave ii on the  zig zag as labelled. Basically, for this count as labelled, we have to drop now and do so in a manner consistent with a 3rd of a 3rd at various degrees. The first level to watch is 1065.25, the (B) wave low, as you can see from the chart posted at 20:33 BST. Breaking that low would be a good indication that wave [3] of iii has started.

Option 2 - Wave [ii] topped at 1131.23

15 min chart:

For this Option, five waves down from 1131.23 represent wave (i) of [iii] of minor 1 down. The double zig zag up from 1010.91 would be wave (ii) of [iii], so, assuming its complete, we would be in wave (iii) of [iii] down.

This is the same labelling as on the chart of Option 1 for the rally from 1 July and subsequent decline (although the wave degress are different), so the invalidation point is  the same and the same comments made in respect of that count also apply here.

Option 3 - Ending diagonal complete at 1010.91

15 min chart:

For this Option, 5 waves down from 1131.23 to 1010.91 could be  wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  

It places us now in minor wave 2 up.  I've labelled the start of 5 waves up from the 1010.91 low, on the assumption that we will get a zig zag type move up for wave 2, since we  would be retracing the whole decline from 1219.80, not just the drop from 1131.23.

I'm showing us having completed wave (iii) (at 1099.46) of what I'm assuming at the moment will be a 5 wave move for wave [a] of minor 2.  This would mean the pullback to 1056.88 was wave (iv) of [a].

We would now be in wave (v) which, on the basis of the action, seems to be sub dividing. This, to me, makes this count a little unlikely since it would mean a pretty large wave (v) compared to wave (i). However, unless it takes out 1065.25, its technically valid.

The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that the retracement back up was wave (b). Assuming its complete, we'd now be in wave (c) down and the count shown on the charts of the other Options would likely be in effect.

Remember, if there is further downside  to come, we must stay above 999.83 for the leading diagonal count to remain valid. 

Option 4 - Wave [b] of minor Y within intermediate (X) topped at 1131.23

15 min chart:

For this Option, 5 waves down from 1131.23 would be wave (i) of [c] of minor Y and the double zig zag up from 1010.91 would be wave (ii) of [c].

However, as mentioned previously, counting a complete 5 waves down to 1010.91 does bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page. That would put us now in a minor wave A rally and eventually take us to new highs. If wave (X) did end at 1010.91, then the impulse wave I have labelled on the chart of Option 3 would apply here.

For the moment, I've assumed we started wave (iii) of [c] down  from  the 1099.08 high. The 5 waves down to 1056.88 would be wave i of (iii)  of [c] and the rally to today's high would be wave ii. We ought now to be in wave iii of (iii) of [c].

The invalidation point is the same as for Options 1 and 2, though a continiung wave (ii) correction wouldn't be ruled out unless we take out 1131.23.

Option 5 - Minor wave X within intermediate wave (X) topped at 1131.23. Now in minor Y down

15 min chart:

On this Option, 5 waves down to 1010.91 would be wave [a] of minor Y down and the retracement would be wave [b]. If its over, we would now be headed down again in wave [c] to complete minor Y.

I've labelled a single zig zag on this chart for wave [b], but its end point is the same as for Options 1, 2 and 4, namely, the high at 1099.08, so that would be the beginning of wave [c]. 

I'm counting the 5 waves down from that high to 1056.88 as wave (i)  and today's high as wave (ii) of [c]. The same invalidation point stated for  options 1, 2 and 4  applies here, but again, it wouldn't rule out a continuing wave [b] correction unless 1131.23 is taken out.

On Options 1, 2, 4 and 5, even if 1099.08 is taken out, there remain counts for a corrective move up from 1010.91 (see the first and third charts in my update at 16:55) which aren't invalidated unless we take out 1131.23. So, the bearish Options remain very much alive, even if 1099.08 is taken out.

As mentioned in  my post at 20:33 BST, the divergence between the main indices is potentially bearish. They didn't work that diverence off today, but could do so within the next couple of sessions, in which case, it will have meant nothing. However, its something to take note of since as long as it persists, it has possible bearish implications.

20:33 BST - SPX Update

This complete ending diagonal count has no more room left - it has to drop now or its going to be invalidated.

If the ending diagonal in wave [C] is correct, then taking out 1091.01 would suggest wave ii is done, albeit with a very deep retracement.

SPX - complete zig zag from 1056.88:

Although the depth of the retracement of the decline from 14 July seems to render this count unlikely, so far, the Dow, the Nasdaq Composite, the Russell and BKX are a reasonable way below the high of that date (BKX is nowhere near it in fact), so this count presently works well on those indices.  Only the Transports and the Nasdaq 100 have taken out the 14 July high. This divergence between the indices may prove to be bearish, though they may yet negate the divergnce, of course.

16:55 BST - SPX Update

On the counts I'm following, the 1065.25 level seems to be of potential importance. Here are the charts to show why:

SPX - double zig zag from 1 July:

Taking out 1065.25 on this count may just mean that wave [B] is continuing, but it may start to make the count look unlikely.

SPX -  impulse from 1 July:

Taking out 1065.25 on this count would mean we are not in wave [1] of iii. Provided we don't take out 1056.88, it could be that wave ii is continuing, but I don't think it would look good since today's rally would have to be a [B] wave within ii but it looks like 5 waves, not 3. So, taking out that level may mean this count is unlikely to be in play, even though its only invalidated below 1056.88

SPX - wave [C] of second zig zag:

Taking out 1065.25 on this count would suggest the second zig zag is over, unless wave [B] is continuing - that might seem unlikely for the reasons referred to above in respect of the first chart. However, it wouldn't rule out a continuing wave x, so we'd still have to be on the look out for another zig zag until the 1 July low is taken out.

SPX -  complete zig zag from 1056.88:

Taking out 1065.25 on this count is likely to signify the end of the move up from 1056.88, even though it wouldn't be conclusive until we take out 1056.88.

15:41 BST - SPX Update

Here's another count to consider - that we're in the final [C] wave of a double zig zag up from 1 July. This is more bullish than the count I posted earlier and would probably involve moving above 1099.08. However, its less bullish than the impulse count shown on the chart of Option 3 or the other continuing double zig zag count that I posted at the end of Tuesday night's update:

SPX 1 min chart - in wave [C] of a second zig zag from 1 July:

 

15:16 BST - SPX Update

The bullish options have certainly re-gained the upper hand today - see the chart of Option 3 in last night's update - but this bearish one still remains valid:

SPX 1 min - bearish count:

Its invalidated above 1099.08, so not much room left for it. Still, its worth noting.