13:14 BST - 60 min Counts page updated

See the 60 min Counts page in the menu above.

22:49 BST - SPX Update

Well, it seems that it was right to be cautious as to whether or not we had made a top given that the market was not dropping with any meaning at the time I posted a possible count into a top (see here).

Still, the rally today was odd in that it wasn't very impulsive looking, but of course, there's still time for it to develop. However, there are various ways to account for the action, which I'll show in the charts below.


Remember that the Options listed 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. 

On the chart of each Option I have labelled one of the 2 remaining Counts  for the decline from 1131.23. Each of these Counts could apply to any one of the Options, though what they mean may differ depending on which Option you are looking at. Count 1 shows 5 waves down from 1131.23 complete at 1010.91 and we are retracing the whole of that decline, while Count 4 shows a (i), (ii), i, ii decline from 1131.23 to 1101.91 and we are only retracing the decline from 1082.60 which is the wave i start point.

Here's how things stand after today:

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

9 min chart:

I've applied Count 1 to the chart of this Option. It assumes that we completed 5 waves down from 1131.23 at the low of 1010.91. From that low, I've labelled a double zig zag count with the (C) wave of [Y] still in progress but possibly in its final throes. 

I've shown the action today as part of an ending diagonal for the 5th wave of (C)

We filled the gap I mentioned yesterday and we're right in the middle of the significant area of price congestion that exists up to about 1085. That level would also be a .618 retracement, so may well be the target for the end of wave ii.

Option 2 - Wave [ii] topped at 1131.23

9 min chart:

For the decline from 1131.23 to 1010.91, I've applied Count 1 to the chart of this Option also.

For the move off the 1010.91 low, I've also shown a double zig zag, but the [C] wave of the second zig zag is labelled differently. For the 5th wave of [C] I've assumed an ordinary impulse in is progress. (see the chart below showing an impulse wave from 1058.24). Its likely that there is still more upside to go on this, but the way I have labelled it for the moment means that if we take out 1072.89, its probably finished. However, it would probably be safer to wait for the low at 1069.54 to be taken out.

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

10 min chart:

I've also applied Count 1 to the chart of this Option, giving us 5 waves down from 1131.23 to 1010.91.


I've labelled this 5 wave decline as wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  It places us now in minor wave 2.  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 currently in wave [3] of iii. Once wave [3] is complete, we'll retrace down in wave [4] and it will have to stay above the wave [1] high at 1042.50 for the count as labelled to remain valid.

The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that we are now retracing back up in wave (b). The double zig zag count would apply to the (b) wave.

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:

I've applied Count 4 to the chart of this Option. It puts us in an extending 3rd wave down from 1131.23. 

We've now retraced over 94.1% of wave i of (iii) - its still a valid 2nd wave, but its close to invalidating this count. Remember, the retracement can't exceed 1082.60 if this count is correct. If it does, it'll be likely that Count 1 is in operation (see chart of Option 1 above).

I've shown a slightly different labelling for wave (C) of [Y], making the whole of (C) an ending diagonal. However, I don't think its valid (so I haven't done a close up chart) since its difficult to count  the 4th wave as a zig zag. Still, we'll see. If one of the other counts for (C) of [Y] is in effect (see the charts of Options 1 and 2 above) then the remaining upside which is likely on those counts may well lead to the invalidation of this Count.

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

9 min chart:

On the chart of this Option I've also applied Count 4, so the comments made in respect of invalidation on Option 4 also apply here. 

I'm also showing a further alternative way to count the rally from 1010.91. Its a single zig zag, but different from the one I've shown previously in that we would have wave [C] starting from the low at 1018.33.

Again, there may well be more upside to come and that could invalidate this Count, in which case I'll switch it to Count 1 showing 5 waves down from 1131.23.

Here is the double zig zag count updated from yesterday, which is on the chart of Option 1:

Double zig zag:

And here is the impulse from 1058.24 which is on the chart of Option 2:

Have a great weekend!

17:07 BST - SPX Update

Well, if we did top out at today's high, this is how I would count the start the next decline:

SPX 1 min:

I can't say that the market seems like its in any hurry to drop, so caution required as to whether or not we've made a top.

Bear in mind also my update at 12:17 BST setting out the risks that the next drop may only be a temporary suspension of the up move.

15:53 BST - SPX Update

Looks like a possible wedge into a top? Let's see:

SPX 1 min:

14:11 BST - ES Update

The high of the 5 wave move up on ES shortly after the open yesterday looked like the completion of wave [C], but it seems it was only the 3rd wave of wave [C]. It took until after the cash session closed for ES to take out that early session high.

Now it looks like we may either have a top for wave [C] or be very close to one, just as appears to be the case on SPX. Here's the ES  chart:

ES 5 min chart:

 

12:17 BST - SPX Update

In last night's update I posted the chart of the double zig zag I've labelled from the 1 July low. I labelled it as complete at yesterday's high, but on the charts of 4 of the 5 Options I'm following for the decline from 1219.80, I labelled it as requiring one more high to complete, or complete at yesterday's close with a truncation.

Either way, the count implies that the double zig zag  from 1 July  is on the verge of completing if it hasn't already done so. Since triple zig zags are said to be rare, this would likely mean that we would also be at the end of the whole correction since 1 July.

That would fit well with us being at a 50% retracement level, resistance and a gap area, as shown on this 5 min chart of SPX:

SPX 5 min - Count 1 with double zig zag:

However, if we only have a single zig zag from 1 July (I posted this before the open yesterday but during the session I only updated the double zig zag count), then once that is complete, the market should fall back from there, but we'd need to be alert to the risk of a second zig zag developing to achieve a greater retracement than the first did. Here is the updated chart of the single zig zag count:

SPX  1 min - single zig zag:

The thing I don't like about it is that wave (2) of [C] is such a shallow retracement. Still that doesn't invalidate the count, so assuming its a possible count, it too could just about be complete, again, at the 50% retracement level, etc.

As I've said, once complete, the market should fall back and, if its the end of the correction, then the decline should be pretty swift, given that we would be in a 3rd wave down on virtually all the Counts I'm following (the exception possibly being Option 3 as explained in last night's update).

The trouble is that a double zig zag could develop at any stage provided that the wave [A] low isn't taken out. Having said that, the deeper the decline, the greater the odds will be that a second zig zag will not develop simply on the basis that you want a zig zag to look like one. Sill, unless and until the wave [A] low is taken out, it will be difficult to know for sure that the correction is over, so caution will be required on the short side until then.

Of course, I can't ignore the potentially bullish labelling I have on the chart of Option 3. This puts us at the start of a possible 5 wave move up for the first leg of a minor wave 2 correction of the drop from 1219.80, on the basis that we completed a leading diagonal  minor wave 1 at the low of 1010.91. Here's a close up of this labelling of the move from 1 July:

SPX 1 min - impulse from 1 July low:

On the basis of the way I've labelled it, we're nearing completion of  wave [3] of iii. Obviously, we'd expect a wave [4] retracement next. Here, we have a level to watch for that will raise the odds that we're not seeing an impulse up - 1042.50, the high of wave [1] of iii. Wave [4] can't end beyond that level. If it does, then the count as labelled is invalid.

So, if we are at the end of a correction off the 1 July low, we need to see a decisive and, preferably, swift, decline in 5 waves from wherever the correction ends. Anything less might have to be regarded as a potential warning that we only had a single zig zag up from 1 July and a second is now about to begin, or, that we are in a much more bullish and deeper retracement up, retracing the decline from 1219.80, not just the decline from 1131.23 (and on this latter potential, taking out 1042.50 would be a very strong indication that this impulse count is not happening).

9:13 BST - Dollar Update

Here's an update to the dollar chart I posted yesterday showing that potential ending diagonal for the 5th wave of (c) in a wave [iv] correction.

Dollar 60 min chart:

It did make a slightly lower low, which was the risk I mentioned yesterday, but it does now look even better as an ending diagonal. With the way it has developed, today's low may well be the end of the pattern. That low is 83.622, but note that further downside is possible provided 83.315 isn't taken out - that would make wave [5] longer than wave [3], which would invalidate the pattern.

Really, as mentioned yesterday, we want to see the wave [4] high taken out to increase the odds that the pattern is complete. I've marked what I think is the wave [4] high at 83.985.

Even if we do exceed that high, we have to watch the low of the pattern, wherever  that may end up being, since once this pattern is complete, that low should not be taken out and if it is, then something else is happening. In this case, it may be that its not an ending diagonal but a leading diagonal for only the 1st wave of wave v of (c). At this stage I don't think that is likely, but its not something that can be ruled out.

The MACD and its histogram do seem to be indicating that a bottom of sorts may not be far off. The MACD has been diverging bullishly against the new lows in price since 1 July and despite the downward movement in price yesterday, the histogram barely got below zero and, in fact, spent most of the time above the zero line. Still, its price that matters and the levels given above are what I'll be watching.

22:11 BST - SPX Update

Although today's action did not eliminate the Counts I was following that had us in a 4th wave correction of some degree (Counts 2 and 5), the retracements were deep enough that I have now dropped those Counts. That leaves Counts 1 and 4 mapping the decline from 1131.23.  Count 1 has us in a deep 2nd wave retracement of the 5 wave decline from 1131.23, while Count 4  puts us in a (1),(2),i,ii down from 1131.23 and so in a shallower 2nd wave retracement of the decline from 1082.60, the start of wave i.

The Options listed 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. 

On the chart of each Option I have labelled one of the 2 remaining Counts  for the decline from 1131.23. Each of these Counts could apply to any one of the Options, though what they mean may differ depending on which Option you are looking at. 

Here's how things stand after today:

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

9 min chart:

I've applied Count 1 to the chart of this Option. It assumes that we completed 5 waves down from 1131.23 at the low of 1010.91. From that low, I've labelled the double zig zag count that I was posting earlier (an up to date chart can be found at the end of this post).  

It puts us in the [C] wave of the second zig zag from 1010.91. Its possible that today's high marks the end of the second zig zag, or that the late day rally is the end of it, with a truncated 5th wave within [C] (the Dow made a new high but SPX did not) or we may have one more high to go to complete wave [C].

We are right at the bottom of the gap I mentioned yesterday, which starts at 1071 and ends just above 1074. Its also a 50% retracement of the decline from 1131.23, so it wouldn't be surprising if we turn back down here given a complete, or nearly complete, wave count.

Option 2 - Wave [ii] topped at 1131.23

9 min chart:

I've applied Count 1 to the chart of this Option also, so the comments made in respect of Option 1 apply here too.

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

10 min chart:

As posted earlier today, I've also applied Count 1 to the chart of this Option, giving us 5 waves down from 1131.23 to 1010.91.

Remember that for this Option to remain valid, we need to stay above 999.83 for the 5th wave of the leading diagonal and so far, we have. 

So, the main labelling from the 1010.91 low is now the bullish possibility that those 5 waves down complete wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  It places us now in minor wave 2. 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.

The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that we are now retracing back up in wave (b). The double zig zag count I posted today would apply to the (b) wave.

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

15 min chart:

I've applied Count 4 to the chart of this Option. It puts us in an extending 3rd wave down from 1131.23. 

We've now retraced over 78.6% of wave i of (iii) - if we are in ii of (iii), this would be a good place for the rally to end

The retracement can't exceed 1082.60 if this count is correct. If it does, it'll be likely that Count 1 is in operation (see chart of Option 1 above).

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

9 min chart:

On the chart of this Option I've also applied Count 4, so the comments made in respect of Option 4 also apply here.

Here is the double zig zag count that I've applied to the charts of Options 1, 2, 4 and 5 and which would apply if the alternative labelling on Option 3 is in force:

Double zig zag:

As mentioned above, it may be complete at today's high, (which is how I've labelled it for the time being) or with a truncation at today's close, or we may have a little more upside to go to avoid a truncation (the way its labelled on the charts of the Options above caters for the latter two possibilities).

19:23 BST - SPX Update

I've changed the chart of the double zig zag back to the way it was labelled in last night's update, so showing the completion of the double zig zag at today's high. However, it would be more convincing if we could take out the high at 1051.01 that I had labelled as wave (1) of [C] in this morning's chart of the double zig zag without making a new high first. Until then the risk remains that this morning's labels are correct and that we are still in wave (4) of [C] with a further new high to come. Here's the chart:

SPX 1 min chart - double zig zag:

16:59 BST - SPX Update

Just updating  the SPX double zig zag chart I posted earlier. If this isn't just a 4th wave before another rally. we have to take out the wave (1) high at 1051.01. That will likely mean that we completed 5 waves up for wave [C] at today's high, with the 5th wave extending from where I have marked wave (2) (as in the chart I posted in last night's Update):

SPX 1 min chart - double zig zag:

15:08 BST - Dollar Update

This looks like an interesting possibility for an end to the decline in the dollar - an ending diagonal for wave v of [iv] of minor 3:

Dollar 60 min:

 

If its right, there's still room for wave [5] of the ending diagonal to move lower, as long as it doesn't exceed the length of wave [3], so watch out for the possibility of a new low. Moving above the wave [4] high should mean the diagonal is complete.

14:49 BST - ES and SPX Update

Well, on ES it looks like 5 waves up to 1067.75 from the low I marked as (4) of [C] on the chart posted earlier. On this count, it should mark the end of the zig zag - let's see - it could be taken out pretty quickly!

ES 5 min chart:

The SPX could be a complete 5 up from the [B] wave low on this double zig zag count, if it had an extended wave (5), or it could have another high to go - if the futures have topped its likely SPX has too - at least for today (we have hit the bottom of the gap I mentioned last night):

SPX 1 min - double zig zag:

11:35 BST - SPX and ES Update

In last night's Update I showed a double zig zag count for the move up from 1010.91. On that count, we'd be looking for 5 waves up from the low marked [B] at 1039.93. My labels showed a complete 5 from that level, but the alternative is that we are only in the 3rd wave of 5 to complete wave [C] of the second zig zag.

An alternative is a single zig zag from the 1 July low which puts us well into wave [C] to complete the zig zag. Here it is on a 1 min chart:

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

Obviously, on this count, we need to see 5 waves up from the [B] wave low at 1018.35, whereas the double zig zag count requires 5 waves up from the [B] wave low at 1039.91. If, on the double zig zag count, we're only in the 3rd wave of 5 a wave move, there could be quite alot more potential upside to go if the 3rd wave extends as it probably should. The single zig zag count anticipates less upside.

The single zig zag count is what I have now labelled on the futures also. Here it is on a 5 min chart:

ES 5 min chart:

11:01 BST - SPX Update

I've re-labelled the chart of Option 3 - this has us either having completed a leading diagonal down from 1219.80 at the low of 1010.91, or, as you will see from the chart below, still in wave [v], which is forming a zig zag:

SPX 10 min chart Option 3: Leading Diagonal From 1219.80:

I've applied Count 1 (see last nights SPX Update) to the chart, which shows a complete 5 waves down from 1131.23 at the 1 July low. This would either be wave [v] of the leading diagonal, completing minor wave 1 down, or it would be wave (a) of wave [v], putting us now in the (b) wave. If the latter is correct, remember that we have to stay above 999.83 in wave [v] for the leading diagonal to remain valid.

The Dow and the Nasdaq Comp can also be counted in the same way from their April highs.

And here is the way I would count the rise from the 1 July low if we have started a minor wave 2 rally (if it s a (b) wave within wave [v], then the corrective counts shown on the charts of the other Options (see last night's Update) would apply):

SPX 1 min chart - Impulse form 1 July low:

Obviously, the 1 July low at 1010.91 is crucial to the validity of this count, but an early indication that it may be wrong may come if we take out the high of wave (1) of [3] at 1045.37 without completing 5 waves up from the low marked [2].

22:27 BST - SPX Update

We may finally have some indciation as to whether we're in a deep 2nd wave retracement of the decline from 1131.23 or a shallower 2nd wave retracement of the decline from 1082.60 or a 4th wave retracement or something more bullish that will take us back above 1131.23.

Today the odds increased that we are in a 2nd wave retracement of either the whole drop from 1131.23 (Count 1), or the drop from 1082.60, (Count 4) or, perhaps less likely, a 4th wave retracement of the drop from 1099.64 (Count 5). I think its now pretty unlikely that we are in a 4th wave correcting the drop from 1082.60 (Count 2).


Remember, the Options listed 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. 

On the chart of each Option I have labelled one of the 4 Counts (numbered 1,2,4 and 5) that I'm following for the decline from 1131.23. Each of these Counts could apply to any one of the Options, though what they mean may differ depending on which Option you are looking at.

Here's how things stand after today:

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

7 min chart:

I've applied Count 1 to the chart of this Option. It assumes that we completed 5 waves down from 1131.23 at the low of 1010.91. From that low, I've labelled the double zig zag count that was posted in my last update today.  It puts us in the [C] wave of the second zig zag from 1010.91. Its possible that today's high marks the end of the second zig zag, but we need to be aware of the gap between 1071 and 1074 which the market may be looking to fill.

Interestingly, [Y] is equal to (EDIT:) 1.382 x [W] at today's high, but we've only retraced about 38.2% of the decline from 1131.23, so we perhaps ought to expect more upside before this is done, but be aware that it is possible to count it as complete.

Option 2 - Wave [ii] topped at 1131.23

7 min chart:

This is Count 2 which has us in the 5th wave of a 5 wave drop from 1131.23 extending.

The low of 1010.91 is labelled as the 3rd wave of the 5th wave and we would currently be in the 4th wave. 

This Count is now very unlikely given the depth of the retracement - its nearly 70.7% which would be unusal for a 4th wave. We're quite close to it being invalidated anyway. 1074.63 is the invalidation point - if we take out that level, that will confirm this Count is wrong and that one of the remaining Counts is in effect (the alternate that has been on the chart is Count 1, ie that 5 waves down from 1131.23 completed at 1010.91 and we are now retracing that whole decline).

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

7 min chart:

I've also been showing Count 2 on the chart of this Option and it too seems unlikely to be correct for the same reasons as set out in respect of the chart of Option 2 above. However, I'll keep it on the chart until its invalidated.

Remember that for this Option to remain valid, we need to stay above 999.83 for the 5th wave of the leading diagonal and so far, we have. This means that we do have to consider the bullish alternative, that we bottomed in wave [v] of a leading diagonal down from 1219.80 at the low of  1010.91 low. It will only be invalidated if we drop below 1010.91.

It would mean that we are retracing the whole decline from 1219.80, not just the drop from 1131.23 - if we take out that level, then the bullish alternative is likely to be in play.

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

15 min chart:

I've applied Count 4 to the chart of this Option. It puts us in an extending 3rd wave down from 1131.23. I've marked today's high as the end of wave ii of (iii), but it could have more to go bearing in mind the gap between 1071 and 1074 mentioned above.

So far we've retraced nearly 70.7% of wave i of (iii) - a deeper retracement is perfectly possible for a 2nd wave.

The retracement can't exceed 1082.60 if this count is correct. If it does, it'll be likely that Count 1 is in operation (see chart of Option 1 above).

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

8 min chart:

On the chart of this Option I've applied Count 5 which puts us in an extending 3rd wave off the 1131.23 high. On this Count, we are currently in wave iv of (iii) which is retracing the decline from 1099.64.

Its a deep 4th wave retracement, but its only invalidated above 1085.83, so it remains a possibility at this stage. If it takes out that level, then Count 1  will probably be the correct Count (Count 4 would be invalidated above 1082.60 so that would no longer be a valid Count if 1085.83 is taken out).

Here is the double zig zag count that I've applied to the charts of Options 1 and 5. There are a number of other ways to label the move from 1010.91, but I'll just show this one for the time being, though the charts of Options 2, 3 and 4 show one variation, but without the detail:

Double zig zag:

As mentioned above, it may be complete at today's high, but there are reasons to think  that a higher level will be reached before this move is over (see above comments).  In that case, rather than 5 waves up from the [B] wave low being complete at today's high, we would likely only be in the 3rd wave of 5 for [C].

18:45 BST SPX Update

It may be possible that we're now into the [C] wave of a second zig zag from 1010.91. Here's a possible count:

SPX 1 min chart - double zig zag in progress:

We may already have a complete 5 waves up from the [B] wave low, which would complete wave [C], but it may still need another high. Also, those 5 waves may only be the 1st wave of [C]. If we take out the [B] wave low, that would eliminate the latter possibility and would increase the odds that we have a complete double zig zag.

16:50 BST - SPX Update

Here's another way to count a complete double zig zag at today's high:

SPX 1 min chart - double zig zag complete at 1045.37:

But, as mentioned in my previous update, we may just be seeing wave [A] of the second zig zag:

SPX 1 min chart - double zig zag in progress:

I'm showing [A] as complete, but the 5th wave may still be in progress, so there may be more to go on the upside. 

Obviously, this count also has a lot more upside potential once wave [B] completes.

If we take out today's high then each count will need to be reviewed.

16:21 BST - SPX Update

With yesterday's high being breached, the count that showed a complete double zig zag at that high is eliminated and I've now moved on to the count that had us in a continuing double zig zag.

The rally from yesterday's low could be just wave [A] of that second zig zag, but here is a way to count it that would have it complete at today's high or needing one more high to complete:

SPX 1 min chart - double zig zag in progress:

If we take out that 1039.75 level, it may well mean that this count is complete, as labelled, but as mentioned above, we may only be in wave [A] of the second zig zag, so caution is required on the short side.

14:50 BST - SPX Update

If this count is correct, then this would be the area in which we would expect it to turn down now for wave [3] of  v. Obviously, there's nothing to stop it from going to the higher area of resistance up to about 1040. The invalidation point remains yesterday's high at 1042.50:

SPX 1 min chart - complete double zig zag at 1042.50:

13:44 BST - ES Update

Here's  a 5 min chart of ES showing what I think may be happening, using the nested ones and twos Count (Count 5) I have for SPX (see the chart of Option 5 for SPX from last night):

ES 5 min chart:

I have a possible wave iv top at yesterday's high (which coincides with the high in the cash session). It does look like a clean 5 waves down from there on ES for wave [1] of v,  followed by some sideways action which looks corrective. 

I'm labelling the sideways action as (A)-(B)-(C) for the moment and once complete it would be wave [2] of 5 on this Count (see last night's Update on SPX for the other Counts from the SPX high of 1131.23). Obviously, yesterday's high is crucial to this Count (as it is for SPX), so that's where I'll know its wrong and will then look for more upside in a continuing wave iv, though I'll be alert to the possibility of one of the more bullish Counts perhaps being in operation.