17:17 BST - SPX Update - 1 min bear count and 1 min bull count

The triangle break out provided a bit more than expected which is always nice. Now it looks like we could have a complete 5 waves up from the [B] wave low, although there could be a few more squiggles to come - difficult to tell when the market moves in a striaight line:

SPX 1 min from1129.24 high:

We've retraced nearly 50% and hit the 1096 level where wave [C] is 1.618 x wave [A] as mentioned in yesterday's end of day update. So, it would be a nice place for wave ii to end. The alternate count, by the way, may be less likely now - this retracement is fine for wave ii.

Obviously, what looks like a zig zag could also be a [1]-[2]-[3]. Here's one of the bullish counts from last night's update to show the bullish possibility here:

SPX 1 min - bullish alternate under Option 4:

To negate this we need to take out the wave [1] high at 1082.62 in an assumed wave [4]. Then we need to drop below the low at 1075.16, to rule out a [1]-[2]-(1)-(2). Finally, we need to take out the low at 1069.49.

Until we start to drop and take out these levels, the risk of more upside remains, in my view.

15:41 BST - SPX Update: 1 min chart close up

If this is a triangle, we should see that 5th wave:

SPX 1 min close up:

The height of the triangle is 3.68 points so we could add that to the break out level for a possible target for wave (5) - I think its about 1092 if we break up soon.

If we've had the C wave low of the triangle (the second touch on the lower blue line) its at 1085.91 - taking that out in a wave E would invalidate the triangle. If we're still in wave C, we can't take out the wave A low at 1085.37.

15:22 BST - SPX Update; 15 min pitchforks

In pitchfork terms, the stall that we're currently seeing follows a hit near the upper  line of the new green fork. Price quickly fell back down below the median line of the old blue downward fork and is struggling to get back above it:

SPX 15 min pitchforks:

In terms of the elliott wave count, you'll see from my earlier post that a further high would make an ideal looking 5 waves up from the [B] wave low. If that is to happen, we may see a further move above the median line of the blue fork and towards the upper line of the green fork, but, if we're seeing a 5th wave up, we may see a failure to get to the upper line of the green fork, and a collapse back down as wave [C] completes (or wave (1) of [C]).

If we are only seeing wave (1) of [C], then we may expect further upside to get back to the upper line of the green fork and the upper line of the blue fork after perhaps a false break below the median line of the green fork. We might even see a new, steeper upward fork form to accommodate an acceleration move for (3) of [C].

If we simply break down below the green fork altogther from here - that's going to be pretty bearish.

14:55 BST - SPX Update; 1 min chart close up

This does look like it needs another high to complete a clear looking 5 waves up from the low I have as [B]:

SPX 1 min close up:

If we get it, the question will be whether its all of [C] or just wave (1) of [C]. We'd need to take out the [B] wave low to avoid the possibility of an extending [C] wave.

If we don't get a new high and drop below the high I have as wave (1), it will look like 3 waves up, but it may be one of those waves with a small 1 and 3 then an extended 5 - see the wave from [4] to [5] on this chart.  Again, even if this happens, the high today may only be part of [C] until we take out the [B] low.

13:59 BST - ES Update: 60 min chart

ES on the 60 min chart has been moving up since yesterday's afternoon low, within a new upward fork. Its just reached the upper line of the red downward fork that delineated the drop from the recent highs, so this may provide at least temporary resistance:

 

ES 60 min:

To confirm more upside, we need to break above the red fork's upper line and get towards the upper line of the green fork. We're above the moving averages and the cloud, so things are aligned for more upside. 

The only worrying thing is that as of now, the Dow futures have failed to make a new overnight high along with ES. That's often not a good sign. It may work itself out, but if not, it may be a warning of a possible failed gap up to come when the cash markets open.

11:04 BST - Dollar Update: 20 min chart

I've amended the count for the dollar that I've been showing on the 20 min chart (see yesterday's update), to put the high of wave iii at the high for the rally from the 80.085 low, at 83.016.  

The reason for this is that since we took out the low I had labelled as wave iv, it was necessary to switch to the alternate count I have been following and which I explained in the last update. However, for that, we needed a 5 wave move from the high for [C] of iv. Instead, we're getting what looks like a zig zag. That would mean I'd have to switch to a [W]-[X]-[Y] labelling for wave iv which would have been fine except that both [W] and [Y] would be zig zags, but [X] took out the high of [W], so the overall correction couldn't be a double zig zag, it would have to be a double three. However, for that, wave [W] needed to be a flat since wave [Y] looks like a zig zag. I couldn't label wave [W] in that way since within it, wave (B) didn't retrace at least 90% of wave (A).

I actually prefer this count now since at the 83.016 high, wave iii is about 1.618 x wave i. Also, within wave iii, wave [3] is about 1.236 x wave [1] and wave [5] is about equal to wave [1]. So, some nice fibonacci relationships on this labelling:

Dollar 20 min:

Apart from that re-labelling, there is no significant change to the important levels - this count putting us in a wave iv correction will still be invalidated if we take out the wave i high at 81.534.

You can see on the chart that we're at the 38.2% retracement where there is also support from the wave [4] of iii low. If that support fails, we could well slip to the 50% retracement level and then we would be in danger of getting to the wave i high and invalidating this count.

If it is invalidated, the prior alternative still stands, that we have had a wave (i) high (it would now be at the 83.016 high) and the retracement from there would be wave (ii), so could go alot deeper towards the 80.085 low. Obviously, it could not take out that level since doing so would invalidate that count, in which case, some of the more bearish alternatives noted on the dollar page would have to be considered as possibly in play.

So, we're looking for an end to a wave iv correction around the current levels, to be followed by a wave v move up fairly soon. Watch the 81.534 level for the invalidation of this count and if that happens, the 80.085 low becomes the level to watch.

21:22 BST - SPX End of Day Update

The Options referred to below are different ways to count the move down from 1219.80 to 1010.91 and you can see them on the 60 min counts page, which will put the charts below into context.

The 10 min charts below show various ways to count the rally from the 1010.91 low on 1 July in the context of the larger picture shown on those 60 min charts.

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c). On these 10 min charts, all of these moves are shown as having topped at 1129.24. See the 60 min counts page for what this means, if correct, in the context of each Option.

The count from the high of 1129.24 is the same for all of these Options, assuming the rally off the July low was corrective as these 10 min charts assume.

Here are the 10 min charts of each Option:

Options 1 and 2 - from 1010.91, a double zig zag:

The chart relates to the count for Option 2, but the count for Option 1 is pretty much the same into the high, just one degree lower, namely, a single zig zag which is complete at 1129.24. 

Option 3 - from 1010.91, a triple zig zag:

On this Option, I've shown the rally from the July low as a triple zig zag, also complete at the 1129.24 high.

Option 4 - from 1010.91, a double zig zag:

A double zig zag count also complete at the 1129.24 high, is shown on the chart of this Option.

Option 5 - from 1010.91, a single zig zag with an ending diagonal for wave (c):

On the chart of this Option I've shown a single zig zag count, with an ending diagonal wave (c).

On all of the above bearish (Options 4 and 5 are only  near term bearish) counts, if we  can count a corrective wave high at 1129.24, it doesn't really matter whether its a single, double or triple zig zag. The important thing now is what has happened since the high at 1129.24.

Here is the 1 min chart of the decline from 1129.24. This count applies to all of the Options shown above, although the labels, including the degrees of those labels, relate to Option 2:

SPX 1 min - decline from 1129.24:

You can see from the 1 min chart that there does appear to be a clean 5 waves down from the 1129.24 high to the low at 1069.49. This would be wave i down and we would now be correcting in wave ii up.  If its right that the rally from the low at 1069.49 to the high at 1082.62 was 5 waves, then it means that wave ii is formimg a zig zag.  In turn, this means that wave [B] of ii can't move below the low of wave i.  If it does, then it may be that a double three would have to be counted from the low, instead of a straightforward zig zag.

Or, it may be that one of the alternatives mentioned on the chart is playing out (the second one below is actually the running flat variation of the expanded flat alternative labelled on the chart).

The first of those is that the low at 1069.49 was only wave (1) of [5], with the subsequent rally being wave (2) of [5]. This is quite possible - I can count the rally as a double or single zig zag.  A single zig zag would put wave A of (2) at 1081.40, followed by a wave B pullback, then the rally to the high at 1082.62 would be wave C of (2). This possibility remains intact as long as the high at 1082.62 holds, assuming the decline from there is all or part of wave 1 of (3) of [5].

The second alternative count, if we had 5 waves up from 1069.49 and take out that low before we make a new high,  is that wave [4] of i topped today as a running flat type correction. The 5 waves up from the low would be wave (C) of that running flat, with the decline from there being part of wave [5] of i. This would be a variation on this alternative of wave [4] still in progress which I have on the chart, which assumes that we're seeing a zig zag up from 1069.49, for wave (Y) of [4] for an expanded flat type correction.

Here's a close up of the count showing the end of the triangle I have labelled for wave [4]. Its the chart I've been posting during today:

SPX 1 min close up:

If we don't take out the 1069.49 low and go on to make new highs above 1082.62, then the main count putting us in wave ii up or the alternative which has us still in wave [4] of i would be the most likely counts. The alternate that has us in wave (2) of [5] would become less likely if we take out 1082.62 and would be ruled out if we take out 1083.28. 

Despite today's initial decline, the two bullish counts I've been posting under the bullish alternate for Option 4 remain intact. You can see the bigger picture of the bullish alternate  on the second chart under the Zig Zag from March 2009 page, where it is shown as the alternate count.

I have two possible ways to count this bullish alternate:

SPX 1 min - bullish alternate under Option 4, impulse up from 1010.91:

This count won't be eliminated until we drop below 1056.88.

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

This count will only be invalidated if we drop below 1010.91. However, please note my comments about that low on the 60 min counts page.

So, we can count 5 waves down from 1129.24 to 1069.49. If that's right, giving us our 1st wave down in a larger decline on the bearish counts, we are now in a 2nd wave retracement. This means that the high of 1129.24 cannot be taken out. If it is, these bearish counts, as labelled, will be invalidated.

It wouldn't mean that all bearish counts would be off the table, it would just mean a delay in the resumption of the bear case - see the explanation of what a high above 1129.24 (and 1131.23) could be on each Option on the 60 min counts page.

If we're in wave ii up and its forming a zig zag as the main labelling suggests, assuming wave [B] of ii bottomed at 1075.16, if [C] is to equal [A], we would see the next leg up get to about 1088. That would be less than a 38.2% retracement of the decline from 1129.24, perhaps a bit shallow for a 2nd wave. So, we might have to be prepared for a more substantial [C] wave, say a 1.618 extension of wave [A], which would take us up to about 1096, approximately a 50% retracement. If we only make a 38.2% retracement, it would probably make it more likely that the move up from 1069.49 was part of an on-going wave [4] of i.

Even though we're in a 2nd wave retracement on the main count and it could go all the way back up to the 1129.24 high and still be valid, ideally, it will retrace substantially less than that. The 50% retracement level mentioned above, if [C] were to equal [A] is about where I'd like it to end, especially if we are in 3rd waves down on most of the bearish counts. Anything too much deeper may have us on alert that the bearish count may be getting into trouble.

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

Whether this potential [A]-[B]-[C] is wave ii or still wave [4], it counts reasonably well still. If that is a triangle where I have (B) of the assumed wave [B], it makes it even less likely that the rally from the low today was wave (2) of [5] (but it can't be ruled out completely until we take out wave (E) of the triangle):

SPX 1 min close up:

Support seems to be around 1077, which coincides with the 38.2% retracment level and the wave (4) of [A] low. So, that area may be a logical stopping point for wave [B], but it can go lower.

17:49 BST - SPX Update: 1 min chart close up

The main count of a wave [5] and i low at 1069.49 looks OK at the moment, with what appears to be a decent 5 wave count up from the low (I've labelled it as complete, but it may not be):

SPX 1 min close up:

The alternatives still stand, especially the possiblilty that wave [4] is still in progress (this would line up with what may be happening in the dollar - see my earlier update where the alternate of an expanded flat wave iv may be the preferable count based on action subsequent to that update, even though we haven't yet violated the current wave iv low). 

The option that the rally from the low is wave (2) of [5] is close to being negated and, if we have had 5 waves up from today's low, would seem unlikely, though its possible to count the rally as a double zig zag. If we drop from here and take out today's low, this would certainly be a stronger possibility, though I'd still prefer the expanded/running flat for wave [4] option.

16:24 BST - SPX Update: 1 min chart close up

Here's a closer look at the options for the elliott wave counts just posted:

SPX 1 min close up:

16:18 BST - SPX Update: 1 min chart from 1129.24 high

Well, three possibilities at the moment for this action. Here's a 1 min chart from the 1129.24 high:

SPX 1 min from 1129.24 high:

1) wave [4] was a triangle ending at 1083.28 and we had 5 waves down to today's low to complete wave i. We're now in wave ii up. today's low at 1069.49 must hold for this to remain valid; or

2) as above, but the 5 waves from the end of the triangle to today's low was only wave (1) of [5]. For this to remain valid, we must stay below wave (E) of the triangle at 1083.28; or

3) wave [4] is a running or expanded flat, so we have yet to see wave [5];

12:33 BST - SPX Update 60, 15 and 5 min pitchforks and TA

Following on from my weekend post showing the weekly and daily charts of SPX with pitchforks and other, more conventional technical analysis, here are some intra day charts with a look at what those technical analysis tools might be suggesting:

SPX 60 min:

This was last posted on Friday when I interpreted the chart as suggesting that a further low was on the cards. I don't think that's changed. The RSI turned down at the end of the day, still having been unable to get to the 50 line, let alone above it. The MACD histogram  seems to have formed that peak that is lower than the prior one, which is bearish. The stochastic has turned down from the 50 line, again, bearish.

Price continues to oscillate around the lower line of the blue fork, with the 13ma forming a barrier of resistance at the moment.

As shown in my end of day update on Friday, the elliott wave count suggests another low is required to complete a nice looking 5 waves down from 1129.24. This 60 min chart is consistent with that and its probably set up to give  the postive divergence that we'd expect to see on a 5th wave - I mentioned on Friday that the MACD histogram troughs were consistent with a 1st and 3rd wave down in price; if we do get a 5th wave down, its not difficult to see that we might also get a higher trough in the histogram. If so, we might then start to look for higher low bars within that new trough to indicate that we may have seen the end of the 5th wave, as well as monitoring the elliott wav count (the one I showed in Friday's end of day update may or may not be correct).

Here's the 15 min chart:

The blue fork is the same as the blue fork on the 60 min chart above. You can see the pink fork did a pretty good job of delineating the 3rd wave down (if that's what it was), but was then broken to the upside on Friday. 

We formed a new upward green fork and got to the median line of that fork. This was initially bullish, but the fact that price fell straight back down to the lower line of the green fork, without much hesitation, suggested something was amiss. If it was bullish, price should have bounced at the lower line. Instead, it struggled for a while to cling on to the lower line, but when it hit the upper line of the new black fork that was created from the high that hit the median line of the green fork, it just collapsed away, towards the median line of the new downward black fork. That seems rather bearish.

If we're going to see a 5th wave down, we might expect it to get towards the lower line of the black fork - perhaps repeating the type of action we saw within the pink fork, but on a smaller scale.

The standard technical analysis tools on this chart also seem set up for divergence against a potential new price low, expecially the MACD and its histogram.

Here's the 5 min chart:

Except for the red fork, all of these forks are the same as the forks shown on the 15 min chart.

Its just a closer look at the failure of the break above the pink fork that seemed to be guiding price lower on Friday. Once we broke above it, there was bullish potential, but that was negated with the failure of the green fork, as described above.

Since the elliott wave count, and technical indicators, seem to be consistent with a 5th wave low coming up, we'll need to watch all of them and the pitchforks for signs of an end to the decline, assuming that we do get that move lower for the 5th wave down. 

If we start breaking above the black fork instead, then we'll have to monitor the behaviour of price within any new upward fork that may be formed to see if we may have ended the decline without that 5th wave (though as I've mentioned - see Friday's end of day update - we may already have had the 5th wave) of if we may still be chopping around in the 4th wave before the final drop.

10:36 BST - Dollar Update - 20 min chart

Looking at the 20 min chart of the dollar which shows the count off the 80.085 low, I'm thinking we may be getting an extended wave v up. You can see the bigger picture on the dollar page which I update on Friday night:

Dollar 20 min:

This count will be invalidated if we take out the wave iv low at 82.182. If this count is correct, we ought to see an acceleration up in wave [3] of v. I'd watch the low at 82.477; if taken out, it might be an early warning that this count is not playing out. If the labelling is wrong, it may be an expanded flat forming for wave iv which is a possibility I've mentioned before, ([A] would be the low marked iv, [B] the high marked (B)and [C] would be in progress).

This hourly euro/dollar chart seems to support more downside in euro/dollar and, so, more upside in the dollar index: its found resistance at the 50ma, the falling ichimoku cloud and the median line of the downward sloping pitchfork (its only a speculative one since the upper line isn't drawn from a pivot high). Obviously, the picture here will start to look less bullish for the dollar if we see these points of resistance start to get taken out:

Eur/USD 60 Min:

13:13 BST - SPX Update: Weekly and Daily Charts

Putting the elliott wave count to one side for the moment, (look away now if you're not interested in any other form of analysis) here's a look at some standard technical analysis indicators and pitchforks on the weekly and daily time frames:

SPX Weekly:

The rally into the April 2010 high has given us a large downward black pitchfork. If we've just entered, or are about to enter, a major downtrend, this may indicate the likely general path prices will take. If we're in a major downtrend on this timeframe, price should head for the median line of the black fork.

We've got an inital sign that this fork may have some influence on the market with the rally from the July low having backed off its upper line in reasonably dramatic fashion with this week's candle. This line, the 20ma and the prior pivot high all worked as resistance and forced price back down this week.

Backing off these points, the failure to reach the median line of the upward green fork and the close below the median line of the downward red fork all favour the bearish case on this timeframe.

The indicators do support the bear case - the CCI (144) continues to struggle at the zero line; the RSI (14) has failed at the 50 line; the MACD, which started to curl up, may now be hooking back down from below the zero line; the stochastic has made a somewhat tame move up if the July rally is the start of a new bull trend. 

 

However, we have to see follow through. That would involve seeing price accelerate down, through the bottom of the red fork and into the pink fork.

If it doesn't, we'd have to take it as a warning that the bear case may not be playing out.

SPX Daily:

I think this chart looks very bearish. It doesn't mean that we can't bounce, but it suggests that the odds are against a bounce that is significant and, with the way it looks currently, it probably places the odds against a new high above 1129.24.

Looking at the forks, price has failed to get back inside the upward blue fork. The first two peaks of the July rally reached the median line of the upward green fork, but the final peak in August failed to get there and all three peaks now seem to amount to nothing more than a re-test of and failure at the underside of the major upward blue fork. Its probably confirmation that the uptrend delineated by that upward blue fork is over.

You'll see that price has been oscillating above and below the median line of the downward red fork  for a while now. Friday's action brought us back down to it after it had looked like price was moving up and away from it. This action looks bearish. 

I've drawn in a new pink fork using the 1129.24 high to get the upper line. To confirm the bearishness of the action described above, price should accelerate down towards the median line of the pink fork and eventually break down below the lower line of the red fork.

The indicators on this timeframe also seem to be confirming a bearish outlook.

When posting this chart previously, I've pointed out the difference in the behaviour of the CCI during the August/October 2009 rally in a bull market. During that rally, the CCI was pinned above +100. On the July 2010 rally, it just about got to the zero line and its now backed off hard.

You'll see that even during the initial stage of the March 2009 rally, the CCI trended up nicely, from below zero, up to and through the zero line and right up to +100. On the July 2010 rally, it trend up from below zero OK, but it stalled and has now broken the uptrend it had formed.

Its difficult to put a bullish interpetation on the behaviour of the CCI.

The MACD histogram has obligingly printed lower low bars. The MACD itself is still above zero but is pointing down. It may not fall straight through the zero line. It may hesitate there first and possibly turn back up, coinciding, perhaps, with a 2nd wave rally (if we get our 5th wave down on Monday and then bounce).

The RSI failed to get to the bullish level of 66.67 and has come back down to below 50 quite swiftly, which is bearish.

The triple top in the stochastic played out. We're now at oversold levels, but it doesn't yet show any sign of turning back up.

So, both of these time frames look bearish. However, markets can and do turn quickly and with bullish counts still very much on the table we can't assume that the bearish picture painted by these charts currently will necessarily remain. If price doesn't behave as we would expect in a downtrend (as described above), then it has to be taken as a warning that the picture may be about to change against the bearish case.

10:33 BST SPX - 60 min counts page updated

I've updated the 60 min counts page.

You can see even on the 60 min charts that if we're in an impulse wave down from 1129.24, it would certainly look better and be a more obvious 5 waves if we could get one more leg down to below 1176.69.

Getting 5 waves down is crucial to the bear case. Without it, the bear case is likely to be off the table for at least a short time, because 3 waves would mean a correction only (that is, a correction of the prior move which was up) and imply more upside to come. 

If we don't drop below 1176.69 on Monday and instead move up, we've only got 3 legs down visible on the 60 min timeframe. Now, if this happens, it may be we're still in the 4th wave of an impulse down, or it may be we have a [1]-[2]-(1) down and a move up on Monday would be wave (2) (see Friday's end of day update for the levels to watch that would invalidated those possibilities). 

So a move up on Monday wouldn't necessarily mean that the bear case is out for the time being. However, it would be sensible to have this possibility in mind and just keep an eye on those levels that I mentioned yesterday that would eliminate the bearish counts for the move down from 1129.24.

22:37 BST - Dollar Page Updated

Obviously, I didn't spend all of my time this afternoon making a silly list. To prove it, I've posted an update to the dollar page.

There are encouraging signs that we've started minor wave 3 up, but I've listed some bearish possibilities that could delay it or, worse, could mean its not happening (after reading the update, you might conclude that I did  spend all my time making silly lists).

21:12 BST - SPX Update

With today's action not really having changed the picture on the 10 min charts a great deal, I won't post those charts tonight. I'll just post the charts showing the move since the 1129.24 high which I've posted during the course of today.

If you want to see the slightly bigger picture, have a look at the 10 min charts in last night's update (and for the even bigger picture, click on the buttons in the menu above. The 60 min counts page describes the Options referred to below).

The count from the 1129.24 high is the same for all of the Options I'm following:

SPX 1 min - from the high at 1129.24:

The main count labelled suggests that we've started wave [5] down (the degrees of the labels on this chart relate to the count shown under Option 2, by the way). For this to remain valid we need to stay below the high of wave [4] at 1086.72.

Wave [4] is still labelled with a question mark at the moment since its not certain that we have ended wave [4]. It could be forming a larger correction which will push us up to the 23.6% or 38.2% retracement levels between about 1108 and 1096. Or, as the dotted green lines suggest, we might be forming a triangle with the low at 1079.10 being the (D) wave.

At the moment, based on the character of the move since the 1176.69 low, I'd rate the possibility that that low was wave [5] and wave i down as not very high. It could change with one big impulsive move up, but as things stand, its the least likely of the alternatives mentioned, in my view.

Here's a closer look at what we've seen today:

SPX 1 min - close up:

I've changed the alternative count from earlier to show it as a possible (W)-(X)-(Y) instead of (A)-(B)-(C). The significance is that the (Y) wave will only be 3 waves rather than the 5 that would be required if it is a (C) wave. Its possible that it will end up as a 5 wave rally from the low currently labelled as wave (1) of [5] down, but looking at the correction so far, a 3 wave move off that low to complete wave [4] looks more in keeping. However, either would be acceptable as long as wave [4] does not end above the low of wave [1] at 1111.58.

So, the invalidation point for the count, if there is more upside to come in wave [4] remains as yesterday, 1111.58. If that gets taken out in what we're currently assuming is a wave [4] correction,  an alternative that I've mentioned before but which is not on the chart, is that the low at 1176.69 was wave (1) of [3]. That possibility would be invalidated if we took out the start of what would be wave (1), at 1127.16.

In that case,  it may well be that the count mentioned on the first chart above is playing out, with waves [5] and i having bottomed at the 1176.69 low.

If that alternate is playing out, we'd need to stay below the high at 1129.24 for it to remain valid. If that high is taken out, then obviously, something more bullish is going on. Possibly, that may be the bullish alternates  under Option 4, which you can see charts for in last night's update - both remain valid at this point. Or, any of the Options can accommodate further upside, even above 1131.23, as you can see from the commentary on each Option on the 60 min counts page.

So, those are the levels to continue to watch for signs of cracks in the bearish count. 

For signs that the bearish count may be playing out, we need to make 5 waves down from the 1129.24 high (I'm assuming that we haven't already done so). Taking out the low at 1056.88 would also be favourable for the bear case, but ultimately, we want to see the low at 1010.91 get taken out. As explained last night, this wouldn't exclude any further upside or even new highs in the forseeable future.  So it wouldn't be proof that the bear case is playing out, but without it, there is no bear case.

Have a great weekend!

19:14 BST- PPT Friday Checklist

Reasons to send the market down:

1) moving average resistance;

2) ichimoku cloud resistance;

3) pitchfork resistance;

4) incomplete elliott wave count.

Reasons to pump the market up:

1) to piss off the bears for another weekend?

Sorry  - did I mention I was bored?

18:56 BST - SPX Update: 1 min chart

If this corrective count is correct there shouldn't be much more upside to go - partly because there isn't much room left if this count is to remain valid (I've shown it as needing one more push up, but its quite possible its already complete:

SPX 1 min close up:

If the 1086.72 high gets taken out, then I'll look to the alternative marked on the chart as possibly playing out.

18:32 BST - ES Update: 60 min chart

Since its Friday and I'm bored with this price action, here's an update of the 60 min ES chart I posted before the open, showing the continuing struggle going on against fork, cloud and moving average resistance:

ES 60 min:

It all suggests we should move down again, but the market is always ready to surprise.

18:13 BST - SPX Update: 60 min chart

On the 60 min chart, there are signs of the indicators turning up, but they're not necessarily telling us we should be long. They're moves seem to be consistent with a possible 4th wave still in progress. The MACD histogram in particular suggests we should be due another leg down to get a higher trough low than the last trough low. That would be the signature of a 5th wave, at least that's the theory:

SPX 60 min chart:

So, the downtrend has lost some momentum, but there's no real signal to buy just yet. Well, that's my interpretation at the moment, but I'm keeping my eye on it for developments that might suggest rather more bullishness may be in store.

17:49 BST - SPX Update: 1 min chart

The count for the start of wave (5) down that I posted earlier is looking a bit unlikely at the moment without any impulsive follow through down. However, wave [5] may still be underway with this count:

SPX 1 min close up:

It shows a leading diagonal wave (1) and the rally from today's low is wave (2). The high at 1086.72 remains the invalidation point for this count.

You'll see on the chart a possible alternative where the leading diagonal is, in fact, an ending diagonal wave C within wave (B) of an on-going wave [4] correction. If that's correct, maybe we will get nearer to the 23.6% or 38.2% retracement levels at 1088 and 1095-ish.

At the moment, it doesn't look like the alternative that we had a wave [5] and i bottom yesterday (see note on the first chart in the post to which I linked above) is playing out since we haven't seen any action consistent with a 2nd wave retracement - yet. But there's still time, of course, so I wouldn't rule it out.

15:49 BST - SPX Update - 5 min ptichforks

Here's some more pitchfork action. If this stuff doesn't interest you, don't worry - just click the link at the top of this blog that says "Next blog". I have no idea where it'll take you, but I hope you'll be very happy!

Price is trying to stay within the new upward green fork, but is getting resistance from the upper lines of the downward pink and red forks and the lower line of the blue fork that it broke below yesterday:

SPX 5 min Pitchforks:

If we need a wave [5] down to complete this move off the 1129.24 high (see my earlier post), we're going to break down again below that green fork and probably head towards the median line of the pink one. If its a wave [5], we may not get all the way there, which would be a potential sign of an end of wave [5] and i and the start of a wave ii up - obviously a stronger sign if we see 5 waves down from today's high also.

15:25 BST - SPX Update: 1 min charts

Its possible we just saw a high for wave (2) of [5] if the main count labelled is correct:

SPX 1 min from 1129.24:

Here's a close up:

SPX 1 min close up:

The high at 1086.72 has to hold. If it doesn't, we may be in the (W)-(X)-(Y) suggested or the more bullish alternative of a wave [5] and i low yesterday (or something even more bullish).

13:20 BST - Dollar update

I'm not sure if this count is right, but it behaved like a 4th wave would be expected to behave, so I'll stick with it for the moment:

Dollar 20 min:

If its correct, we should be starting wave v up. Of course, its possible that the 3 wave move labelled iv is only part of an expanded flat correction being formed, in which case we might come right back down again. Wave iv only retraced 23.6% of wave ii, so this can't be ruled out.

Its also possible that the high labelled iii is actually wave i or wave (i), in which case, we probably would see an expanded flat for wave ii or (ii), with the [C] or c wave likely to take out the low that I've labelled iv on the above chart.

We've just ticked above the high of wave iii, with what what could be 5 a  wave move,  so if the chart is correctly labelled, in elliott wave terms, we've done enough to complete wave v, so this rally may be short-lived.  

However, if we're going to get a decent sized wave v, we might expect at least a .618 extension of wave i, which would take it to about 83.076., but if the rally from the low labelled iv is only wave  [1] of 5, we're probably headed higher than that, maybe to where [5] would equal [1] at about 83.630.

For the moment, I have my eye on that wave iv low at 82.182. Taking it out might suggest more downside before we can head higher.

11:31 BST - ES Update: A confluence of resistance

Here's something you might find interesting (or not!). Some interaction between pitchforks, conventional technical analysis of lines of resistance and moving averages and the ichimoku cloud resistance on a 60 min chart of the emini S&P futures:

ES 60 min:

The red downard fork has been on the chart since 10 August. It was only speculative because the lower line isn't drawn off a pivot, I just drew it so that the median line cut through the price action that preceded the pivot which formed the start of the upperline of the fork.

It wasn't perfect in containing price, but it did a reasonable job. The median line did provide resistance yesterday for a while, and when price broke above it, it came back briefly to test that median line.

As we would expect when price gets above the median line of a fork, it went up to the upper line and broke through it this morning.

You can see that an upward green fork was drawn from pivots that occurred yesterday and price seemed to be following the median line of thaat fork up.

However, it hit an area which represents a confluence of resistance as identified by various groups of traders - those using pitchforks, (price was re-testing the median line of the green fork having backed off it earlier) those using ichimoku clouds (price was hitting the underside of the cloud) and those using conventional technical analysis of resistance lines (see the blue horizontal line) and moving averages (price came to the 50ma).

With price hitting an area of resistance being looked at by all those groups of traders, you can see the reaction that just occurred.

I've now drawn in another fork (purple) using the pivot high we hit today. If this down move is to continue, we should see price move down to the median line and, possibly below (like it did in the red fork). Let's see.