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

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

SPX 1 min - from 1105.10:

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

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

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

SPX 1 min - from the high at 1105.10:

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

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

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

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

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

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

SPX 1 min - from 1039.83 low: 

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

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

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

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

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

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

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

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

SPX 1 min from 25 August low:

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

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

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

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

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

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

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

SPX 1 min - close up:

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

21:25 BST - SPX End of Day Update

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

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

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

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

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

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

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

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

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

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

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

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

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

Chart 2: SPX 1 min close up:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

19:04 BST - Dax and FTSE update

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

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

Dax Daily: 

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

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

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

Dax 60 min:

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

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

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

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

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

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

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

FTSE daily:

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

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

FTSE 60 min:

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

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

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

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

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

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

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

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

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

SPX 15 min:

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

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

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

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

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

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

21:17 BST - SPX End of Day Update

The action today has eliminated two of the bearish counts that I've been following, as explained in the intra day updates today. I'll deal with the remaining bearish counts below. The bullish counts were updated in my earlier post which you can read by clicking here.

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

So, here is the position on the remaining bearish counts: 

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

The main count on this chart shows a subdividing wave iii down and puts us currently in wave [2] of iii.  I've placed the wave [1] of iii low at 1039.70 and labelled an (A)-(B)-(C) correction for wave [2] (I've dropped the (W)-(X)-(Y) option shown in the last update today given the new high above 1080). If that's correct, wave [2] could be almost done at today's high. We've retraced just over 61.8% of wave [1], and that's a good level for a wave [2] retracement.

If I put the wave 4 of (C) low at 1076.22, I can count 5 waves up to the high at 1081.30. However, if the wave 4 of (C) low is at 1076.20, it looks like another wave up is needed to make 5 waves. However, if we take out the high at 1078.59 (which I would count as the 1st wave within wave 5 of (C)) before making a new high, that could be good reason to think that wave 5 of (C) is complete (but be warned, that high at 1081.30 could then just be part of a continuing wave 4). I also wouldn't rule out the possibility that the current wave is only the 1st wave of 5 of (C). This could be ruled out if we take out 1076.22, assuming that's the wave 4 of (C) low.

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

The alternate count shown on chart 1 has us only having completed wave i down, so puts us now in wave ii up. We'd be retracing the entire decline from 1129.24, so the upside on this count could be a bit more than on the main count. A 50% retracement would be about 1084, 61.8% would be about 1095 and 78.6% would be about 1110.

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

Here's the close up showing the decline from the wave ii high at 1100.14:

Chart 2: SPX 1 min - from the 1100.14 high:

As mentioned above, I've labelled the move up from the 27 August low as  an (A)-(B)-(C) correction. If wave (C) is not yet complete, the next fibonacci retracement level to look at is the 70.7 level at about 1082.50 and then the 78.6% retracement level which is at about 1087.

Here's a closer look at today's action with an update of the chart I posted earlier, showing the move off the 1039.70 low I have as wave [1] of iii or wave i:

Chart 3: SPX 1 min close up:

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

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

I don't particularly like this count, but its valid and if its correctly labelled, we need to see 5 waves up from the low marked [B] at 1039.70. As you can see from the chart, there seem to be a few more waves necessary to achieve that. Its quite possible on this count that it could reach the 61.8% retracement level at about 1107. But equally, it could fall short - if it failed to get above the wave [A] high at 1100.14, it would be a running flat rather than an expanded flat.

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

So, thankfully, the market has eliminated two of the bearish counts that I was following. That still leaves these three for the bear case,  plus the bullish counts which I updated earlier (click here to see that update). Still, as before, the elliott wave logic arising from each count can be used to identify when a count can be eliminated from consideration. Currently, the levels to watch are as follows:

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

2) if we take out that 1100.14 high, then, for the bear case,  we may be in  the alternate count shown on chart 1, which counts the completion of wave i down from the 1129.24 high, or in the expanded flat for wave ii shown on chart 4, or one of the more bullish counts shown in the update posted earlier (see here).

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

20:00 BST - SPX Update: 1 min close up - possible count for today's rally

Here's an attempt to count the move up today, starting with the low on 27 August at 1039.70 which I have as wave [1] of iii (or wave i  - not shown on this chart) on the bearish counts (see my earlier post):

SPX 1 min close up:

In yesterday's end of day update, I had the wave [2] (or ii) labelled as either an (A)-(B)-(C) or a (W)-(X)-(Y) correction. The difference between them is that if its the former, we need 5 waves up from wave (B) to complete wave (C). If its the latter we only need 3 waves up from wave (X) to complete wave (Y).

As you can see from the chart, if its a (W)-(X)-(Y) correction, we may already have a top at 1080. If its an (A)-(B)-(C) correction, we probably need another high before its done.

Unfortunately, there's no way to tell which is the correct count. The only solution is that if you were short, you'd probably want to be out above today's high to be on the safe side, unless you're willing to sit through a 5th wave that could get up to the 78.6% retracement level at about 1087, assuming that we're in wave [2] and not ii (if its wave ii, the upside is much greater).

17:03 BST - SPX Update: Bullish Counts Update

Here's an update on the bullish counts I've been following (last update can be read here)

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

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

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

SPX 1 min - from 1039.83 low: 

If the labelling from the [b] wave low is correct, once wave [3] of iii tops, wave [4] must stay above the wave [1] high at 1055.14, otherwise the labelling is invalidated. It wouldn't invalidate the whole count, because the count from the high at 1129.24 shown on the charts below could also be applied here. On those counts, we could still be in wave [B] of y if that high of 1055.14 goes leaving only 3 waves up from the low at 1040.88:

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

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

All of these counts remain valid provided we stay above the July low at 1010.91.

15:20 BST - SPX Update: 1 min: wave iv of (i) invalidated - next bearish alternatives in play

Progress at last. Two of the counts shown in yesterday's end of day update have now been invalidated. The count that had us in wave iv of (i) down has now been eliminated with the move above 1069.49. For the bear case, this leaves the expanded flat wave ii shown in chart 1 in yesterday's end of day update and the counts shown on charts 3 and 4. Here's the latter - a wave [1] of iii or wave i low (which I've put at the 27 August low at 1039.70):

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

The next level we need to watch is 1100.14 - if that is taken out, then the main count shown on this chart will be invalidated and the expanded flat wave ii or the wave i low at 1039.70 will become the focus for the bear case.

14:45 BST - SPX Update: 1 min: wave completed wave iii of (i) down from 1129.24 and now in wave iv?

The main count on chart 1 from yesterday's end of day update which put us in a (1)-(2) within wave [5] down has been invalidated with the rise above 1065.21 today. Its possible we're still in wave [4] of iii down, but for the moment, since it will be the next count to be invalidated if we rally further, I'm showing us in wave iv of (i) down. Wave iv can't end above the wave i low at 1069.49. Here's the chart:

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

12:15 BST - Dollar Update: In wave (ii) down of minor 3?

Here's an update for the dollar (you can see the last update by clicking here and on the dollar page):

Dollar 45 min:

In my last update I was thinking that we had topped in wave (i) of minute [i] of minor 3 up, but there was a possibility that we were still in wave  [4] of v of (i), so I wanted to see the level of 82.717 taken out by way of confirmation.

That level was eventually broken, so my main count  here is that we are now in wave (ii) of minute [i] of minor 3.

I've left the retracement levels for that on the chart and as mentioned in the previous update, I'm looking at a retracement to somewhere around the 50%-61.8% level which is between 81.800 and 81.394.

I've labelled wave (ii) so far as an a-b-c zig zag with wave c probably in wave [3]. Within that wave [3] of c, on a smaller time frame it looks like wave [3] still needs a 4th and 5th wave to complete, and then we'll see waves [4] and [5] of c.

If this is correct, at least the 50% retracement level should be attainable. Its also possible that this a-b-c correction might only be wave w of (ii) and that we will have more downside to a deeper retracement level with wave y. Once I see 5 waves down from the b wave high, I'll be watching how price moves up for clues as to whether or not its the end of the correction. 

Its also possible that what I'm labelling as an a-b-c should itself be an almost complete w-x-y correction, so instead of seeing 5 waves down from where I have labelled wave b, we would only need 3 waves down to complete wave y. On my reckoning, it would be almost done, if not already, and would fall short of the retracement levels I'm looking at.

The only warning of this would be to see what happens after the low in what I would label as wave [3] of c currently. It should be followed by a corrective looking move up for wave [4] and must not end above the wave [1] low at 82.988. If it moves up there, that would be a strong indication that we may have seen an end to the correction. Taking out the high I've labelled as wave b at 83.303 would be a stronger sign that the correction was probably over. However, we'd also have to see a strong impulsive move up  and above the high labelled (i) at 83.522 given that we would be in wave (iii) of minute [i] for greater confidence.

21:30 BST - SPX End of Day Update

The market continues to behave in a way that means both bullish and bearish counts remain feasible, with all of the levels I'm watching to invalidate one or other still intact.

I updated the bullish counts earlier (see here) so won't deal with them again in this update. If you want to see those counts and the following charts in context, please go to the 60 min counts page.

So, here is the position on the bearish counts:

Chart 1: SPX 1 min - from the 1129.24 high, i-ii-[1]-[2]-[3]-[4]:

The main labelling puts us in wave [5] of iii down from 1129.24. As shown in my earlier post, it may be that wave [5] and, therefore, wave iii, ended at the low of 1040.88 that we saw today, with a slight truncation. In that case, we'd now be in wave iv up. 

However, for the moment, I'm assuming that we are still in wave iii because I think it would make more sense if wave iii reaches something like a 1.382 extension of wave i rather than being more or less equal to it. Still, if we take out the high at 1065.21 without a 5 wave decline preferably below 1039.83, the truncated 5th within wave iii would certainly be an option to consider.

I've re-labelled today's action from earlier to show us still in wave (2) of [5]. Its possible that wave (2) topped at 1055.14 as shown earlier and we've had a 1-2-i-ii down since, but for the moment, with that late rally, I'll assume more upside unless we take out the 1044.02 low without taking out the 1053. 75 high first (you can see more detail of this on chart 2 below).

I think that the alternate count shown on this chart, that has us still in wave ii in the form of an expanded flat, is becoming less likely as time goes on, as mentioned in my earlier post, but it remains a valid possibility.

Here's a close up of the above chart showing the main count as well as as the possibility that wave iii has already bottomed:

Chart 2 - SPX 1 min from the 1081.58 high:

If we've had a wave iii low, there are two places where it may have occurred, as you can see from the chart. The only difference it makes is that if it was at today's low, we probably have a bit more time to use up for wave iv so could see more upside for longer. Whichever low might be right, the fact is that if we are now in wave iv, it has to stay below 1069.49, which is the wave i low, otherwise the possibility would be eliminated.

If we take out that level or the 1065.21 level, invalidating the counts shown above, then, for the bearish case, I'll be looking at the other bearish counts I'm following which imply more upside above 1065.21 and probably also above 1069.49:

Chart 3 - SPX 1 min: from 1129.24, i-ii-[1] or wave i down:

The main count on this chart shows a subdividing wave iii down and puts us currently in wave [2] of iii (I've moved the (W) and (X) labels since yesterday).  As I said in yesterday's update, wave [2] of iii may have completed at the 1065.21 high, but I think its best to assume more upside to a higher retracement level, say, 50% for this. This count is invalidated if we take out the wave ii high at 1100.14.

The alternate count shown has us only having completed wave i down, so puts us now in wave ii up. We'd be retracing the entire decline from 1129.24, so the upside on this count could be substantial.

With both these counts, there remains an issue as to whether the low of wave [1] or i occurred on 25 or 27 August. Again, it doesn't affect the invalidation points. It simply means that we may have more time to use up than we have so far in wave [2] or ii if the low was on 27 August.

If the wave [1] or i low was on 27 August, here's what we might be seeing:

Chart 4: SPX 1 min - from the 1100.14 high:

I've labelled the move up from the 27 August low as  an (A)-(B)-(C) correction, but it could be an (W)-(X)-(Y). If its the latter, we'd need a 3 wave rally for wave (Y) rather than the 5 waves that would be needed for a wave (C). 

So, on the main count shown in chart 1 above, if we take out the high at 1065.21 before a 5 wave move down, preferably to new lows below the wave [3] low, that will be invalidated.  I would then be looking to the levels  identified in previous end of day updates:

1) if we're in wave iv up, it can't end above the low at 1069.49 if it does, then that would rule out the possibility shown in chart 2 above that we were rallying in wave iv;

2) the next count to look at would then be the  i-ii-[1] which is the main count on chart 3 above That count remains valid unless we  take out the high at 1100.14;

3) if we take out that 1100.14 high, then we may be in the expanded flat for wave ii shown as an alternate on chart 1, or the count that has us having only completed wave i down from 1129.24 (the alternate shown on chart 3),  or one of the more bullish counts shown in the update posted earlier (see here).

4) 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 shown in in the update on the bullish counts is bearish once wave [c] of 2 completes. If that count is in play, we would need to see impulsive downside action once wave [c] and 2 end, otherwise, focus will have to switch to the bullish counts under Option 4.

19:09 BST - SPX Update: Bullish Counts Updated

Referring back to the bullish counts on Charts 1 to 3 in yesterday's end of day update, the first one just managed to survive today and the second two may have ended in slight truncations for their final [C] or (c) waves. Here's how they look at the moment:

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

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

SPX 1 min - from 1039.83 low: 

Even if we invalidate this count by taking out the 1039.70 low, the count shown in the charts below can be applied to this chart:

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

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

On these counts, the [C] or (c) wave would be the ending diagonal I labelled in my earlier post, giving a slight truncation, but it would be a valid count. If the diagonal was a leading diagonal and we go on to take out today's low and the 1039.70 low, that would be fine too, but we have to stay above 1010.91 in order not to invalidate the count.

17:11 BST - SPX Update: 1 min: bearish count - wave (2) of [5] high perhaps?

If we're in wave (2) of [5] (the 1st possibility listed in my last post), its retraced just about 61.8% of the decline from 1065.21 to today's low:

SPX 1 min from the 1081.58 high:

Its also at resistance (referring to the main labelling on the chart above) from the wave 3 of (1) low and the wave b of 5 high (not labelled). With the risk that what I've labelled as wave Y of (2) has more to go to the upside, you'd want to be out above today's high. Taking out 1049.22 would help this count, but today's high would still be a good place to get out if it moves back up there, given the more bullish possibilities that remain. Of course, for this count, 1065.21 is the invalidation point.

16:14 BST - SPX Update: 1 min: bearish counts

We had the makings of a nice impulse wave finally developing to the downside, but its no longer easy to count a simple impulse from the 1065.21 high to today's low.  I think its now looking like an expanding diagonal as shown on this chart:

SPX 1 min - from the 1081.58 high:

If I try to count an impulse down from 1065.21, the move  up from today's low would have to be a 4th wave within that impulse. However, it doesn't really look like a 4th wave. It looks more like a 2nd wave, which is why this expanding diagonal comes to mind. Here are some of the options on this overall bearish count:

1) if its a diagonal, then it could be a leading diagonal wave (1) (it would be wave (1) of [5] on the main count labelled on this chart). This is invalidated above 1065.21; or

2) it could be an ending diagonal representing all of wave [5] (truncating, therefore) and therefore also wave iii. We'd now be in a wave iv rally. This would be invalidated if we take out 1069.49;

3) if the 1039.70 low was the end of wave iii and 1065.21 was wave [A] of iv, today's low could be double zig zag for [B] of iv. We would now be going up in [C] of iv. If we take out the low at 1039.70 before taking out 1065.21, this count would be invalidated since I'm counting wave [A] of iv as 5 waves, so its forming a zig zag and wave [B] in a zig zag can't move below the start of wave [A]. Also, wave [C] of iv has to stay below 1069.49 or the count is invalidated.

If any of these three counts is playing out, there could be more upside, but it is limited by the invalidation points referred to above. If they are taken out, then attention has to switch to the other counts which imply varying degrees of more upside (see yesterday's end of day update).

Here's a chart showing this count from 1129.24 for a bit more context:

SPX 1 min - from the 1129.24 high:

This chart shows the other possibility that we're still in wave ii up, and now in wave [C] of ii which should take us above the 1100.14 high. I'm not sure I like this count since wave ii is looking abit long in the tooth now, but it remains valid.

For the moment, for these bearish counts listed above, I'm watching the 1065.21 high and the 1069.49 low.

14:07 BST - SPX Update: 60 min chart

On Saturday when I looked at the 60 min chart of SPX, I highlighted the behaviour in the technical indicators that  suggested that however bullish the price action appeared to be on Friday, the technicals did not seem to be painting the same picture.

I noted on the chart in that post the sort of things the bear case needed to see and all of them have pretty much occurred with yesterday's action.

You can see this in the updated 60 min chart:

SPX 60 min:

The notes on the chart are self-explantory and identify the further action we would need to see from these indicators to confirm the weakness in the market seen yesterday.

I've also noted on the chart a couple of concerns that may undermine the bear case, at least temporarily:

There is a little bit of a worry that we didn't see any negative divergences between the indicators and price when comparing the high of 26 August and the higher high on 27 August. That raises the risk of another high above 1065.21 being necessary in order to achieve such divergence before the bear case can continue. 

As I've said before, divergences aren't compulsory, but they are often seen at tops and bottoms and help to identify them as such.  A higher high would fit with the count shown in Chart 6 of yesterday's end of day update, as well as the bullish count on Chart 1 of course. So, if this is what we see, it may increase the odds that one of these counts is playing out. If we fail to take out the 1039.70 low (preferably early on in the session), that may be the first sign that more upside above 1065.21 may be on its way.

Even if we don't rally up to take out the high of 27 August before making a new low, the indicators again look like they are set up to diverge positively against any new low in price. As noted on the chart, this would be consistent with the main count on Chart 4 and the alternative shown on Chart 5 of yesterday's end of day update which call for a 5th wave down now, as well as the bullish counts on Charts 2 and 3. which require a [C] or (c) leg down to complete their corrections. 

So, on any new low below 1039.70, I'll be watching for positive divergence between price and the indicators since it  may be a warning of an imminent turn back up in price as happened on Friday (after Thursday's session, the same positive divergence potential had set up and a substantial rally followed - see this post).

So, the lack of follow through to Friday's bullishness was a plus sign for the bear case. However, the bullish counts calling for varying degrees of further upside remain intact, so, as I said in yesterday's end of day update,  it remains a matter of monitoring the levels that elliott wave logic tells us will rule out various counts as price action develops and seeing what we are left with (I identified the levels I'm watching on the counts I'm following in that update)