15:37 GMT - SPX Update

For the move down from yesterday's high, I'll stick with the count I showed on Chart 4 in yesterday's end of day update for the moment for the main and alternate counts. Here it is updated:

SPX 1 min - close up:

The main count is very bearish, but you'll see I've added another possibility, that we're currently in wave 3 of (3) down and possibly nearing an end to it (it may have ended at today's low of 1204.33). On this alternate bear count, once wave 3 is completed, we'd need to see the next rally for wave 4 hold below the low at 1218.95 which would be wave 1 on the alternate bear count.

If the main bear count is playing out, I'd like to see wave iii of 3 become at least a 1.382 extension of wave i. That would take it to about 1200. Currently, its about equal to wave i.

The alternate labelling for the bullish case which puts us in wave [4] down is still valid. On my count, we have to drop below 1194.53 to invalidate it. Its currently retraced about 50% of wave [3]. The lower it goes, the less likely it may become, even though not invalidated.

21:20 GMT - SPX End of Day Update

This is the chart I've posted previously (labelled as if Option 3 on the 60 min counts page is playing out) showing a potentially complete 5 waves up from the August low and which is the basis of the main count on the 1 min close up chart I've been showing:

Chart 1: SPX 60 min - 5 waves up from August low:

So, that's the bigger picture for the bearish count I've been posting. Here's the updated 1 min chart showing the count from 1159.71 low (this chart is labelled as if Option 2 on the 60 min counts page is playing out):

Chart 2: SPX 1 min - bearish count:

There does still remain the possibility that we still need another high to complete the 5 wave rally from the August low. - see the alternate labels. As mentioned over the past few days, we'd need to take out the high at 1194.53 to eliminate that possibility.

However, even if we take out that high, there remains the possibility that the 1127.08 high was only the end of the 3rd wave up from the August low so we have a larger degree 4th wave decline to come and then another rally. The bigger picture for this is on the chart of Option 3 on the 60 min counts page. Here's the 1 min chart from the 1159.71 low that shows this (labelled as if Option 3 is playing out):

Chart 3: SPX 1 min - bullish count:

Again, there's the question here of whether we're still in wave [4] of v of (iii) and that will be eliminated if we now take out the high at 1194.53. But this count would then put us in wave (iv) which could take us down to about 1156 if it achieves a 38.2% retracement, but we'd then see a further rally to complete 5 waves up from the August low.

Here's the close up chart I've been posting for the move from the 1227.08 high (I've re-done the label degrees so both main and alternate counts coincide with the main and alternate counts shown on Charts 2 and 3 above):

Chart 4: SPX 1 min - close up:

The main labelling assumes that a top was put in at 1127.08 (on the bear count (Chart 2) it would be the 5th wave of the rally from the August low and on the bullish count (Chart 3) it would be the end of only the 3rd wave from that low).

The main labelling does seem a bit stretched given the size of wave (2) compared to the size of wave (1). However, the high at 1127.08 held so the count is valid.

Having said that, the risk that the alternate labelling is the correct count remains until we take out the high at 1194.53 and invalidate it. So far, on the alternate labelling, we've retraced 38.2% of wave [3], so I'd probably expect a turn around here if the alternate labelling is playing out.

For the main labelling, there are various ways to label the decline from today's high. For the labelling I've chosen, the bear count should ideally stay below the high labelled 2 at 1219.08. It wouldn't be fatal to the bear count if we take that out. It could well be that the low I've labelled as wave 1 is, in fact, only wave iii of 1, with the 1219.08 high being wave iv of 1 and the low at 1208.94 being the end of wave 1.

The crucial high for this count is, in my view, 1226.84. While that remains intact, the possibility remains that we made some sort of top at 1127.08.

So, I'm watching 1219.08 (taking that out would invalidate the main labelling on Chart 4 above, but wouldn't void the bearish count) and 1226.84 (taking that out would invalidate the labelling for the main count and make it very unlikely that a top was put in at 1127.08)  and 1194.53 (taking out that high would invalidate the alternate labelling on Charts 2, 3 and 4).

19:00 GMT - SPX Update

Taking out the low at 1217.55 that I mentioned in my last post gives the bearish count a fighting chance:

SPX 1 min close up:

As you can see the alternate count remains on the table, with wave [4] just forming a more complex correction.

For the bear count, it could be labelled as a 5 down from today's high or as the (1)-(2)-1-2 that I've shown. If the wave 1 low at 1219.46 gets taken out in an assumed wave 4 of (3), then I'll likely relabel the chart to show the 5 down instead.

The next target for the bear count is 1194.53, the wave [1] high (see yesterday's end of day update). Taking that out would rule out the alternate count on the above chart.

15:55 GMT - SPX Update

Here's an update of Chart 3 from yesterday's end of day update:

SPX 1 min close up:

You can see the slightly bigger picture for this chart on Charts 1 and 2 of that update and the even bigger picture on the 60 min counts page.

The most bearish count survives (just) with an adjustment to make it only a one-two down instead of nested ones and twos. However, we have to take out the low at 1217.55 for this count to have any chance. While we're above that level, the alternative count on the chart above should really be favoured

8:25 GMT - Dollar Update

Last time I posted the daily chart of the dollar, it looked likely that there would be more downside before we could really start thinking that a low may be in on the overall bullish count (see the post on 30 October 2010).

We did get the new low that was anticipated and this has resulted in some nice looking bullish divergences on the indicators in the daily chart:

Dollar Daily:

As you can see, as price made a new low, the indicators shown all made higher lows. This suggests that there is a good chance that we may have seen a low of some sort.

However, despite the dollar's comeback over the last couple of days, there's still alot it has to do to prove that a low is in.

As you can see from the daily chart, we're back into the yellow resistance area I've highlighted in previous posts of this chart. We need to break above it and turn that area into support in order for the bullish case to have any prospect (though doing so wouldn't preclude more downside, so wouldn't be conclusive that the dollar has bottomed). If that can be achieved, the next thing to look for would be a break out above the downward sloping price channel that has formed during this decline.

As a follow through to the bullish divergences in the indicators, we now need them also to get to bullish levels along with a good move up in price: the RSI above 50 and up to the 66.67 level; the MACD above the zero line and the stochastic up to the 80 area. I don't want to see this happen with price only moving sideways - that, in my view, would be a warning of potentially more downside to come.

Here's a 95 min chart showing the move down from the high labelled B on the daily:

Dollar 95 min:

The red horizontal lines show the area of resistance highlighted in yellow on the daily chart. 

The high at 78.273 is key to the bullish case. It has to be broken above on the bullish case. However, doing so wouldn't mean that the bullish case must be the one playing out. If the next significant pullback were to stay above the low at 75.631, we might then have more reason to believe that a bottom has been put in.

Here's a 15 min chart with a potential wave count for an impulse off the low at 75.631:

Dollar 15 min:

It looks like we may still be in wave (5) of [1], but a significant break below the green channel would suggest that its over and we'd then be looking to see a three wave pullback that stays above 75.631 if the bullish case is playing out.

So, while we're above 75.631, the bullish case has a chance, but we need to break above 78.273 if serious consideration is to be given to the possibility that we've bottomed on this count. While we're below 78.273, further downside remains the higher odds option.

You can see the bullish and bearish counts I'm watching on the updated dollar page.

21:16 GMT - SPX End of Day Update

While the high at 1227.08 remains intact, its still possible that it marks the end of the rally from the August low. However, it has to be said that the action since that high doesn't inspire confidence in such a count and the counts which entail further highs to come remain higher odds at this stage.

The context for the following short term charts can be found on the 60 min counts page.

Chart 1 shows the count  which assumes that we put in a top for the rally from the August low at 1227.08 or that we have one more rally to come, but once a top is in, that will result in significant downside. How much will depend on which Option from the 60 min counts page is playing out. 

Chart 1 is labelled as if Option 2 on the 60 min counts page is playing out so the top for the rally from the August low will be wave X and the decline that follows would be wave Y in an expanded flat type correction. However, it could equally be applied to Option 3 and what that means on Option 3 would depend on which of the three interpretations of that count is in operation (I've listed them on the 60 min counts page) :

Chart 1: SPX 1 min - bearish count:

Chart 2 below shows the more bullish count and is labelled as if Option 3 is playing out. It has us looking for only the end of the 3rd wave in a 5 wave rally from the August low. Again, its not clear yet whether the 3rd wave, wave (iii), on the labelling on Chart 2 below, has topped or whether a further rally is required as suggested by the alternate labelling.

Chart 2: SPX 1 min - bullish count:

On the labelling on both of the above charts, while we're above 1194.53, the odds favour  a further high being required to complete the wave v or wave (iii) labelled on those charts. Taking out 1194.53 without a new high above 1127.08 would void the alternate counts shown. It would then be a question of whether we completed 5 waves from the August low at 1127.08 (as shown in Chart 1) or whether that was only the end of a 3rd wave (as shown in Chart 2).

For the moment, the price action since the 1227.08 high suggests its more likely that we're in or we completed a 4th wave on the alternate count shown on the above charts. However, until the high at 1127.08 gets taken out, its possible that it could be  series of ones and twos down as shown as the main labelling on Chart 3 below (once again, ignore the degrees I've used for the main labels - they're just for illustration):

Chart 3: SPX 1 min - close up from 1227.08:

On the main labelling on Chart 3, I've labelled a set of ones and twos down on the assumption that 1227.08 was a top in wave v or wave (iii) on Charts 1 and 2 above. However, as you can see,  the alternate, that we only completed (or are still in) a 4th wave within wave v or (iii) today is very much a viable count. As mentioned in previous updates and above, its to be preferred while we're above 1194.53.

For the bear count now to gain credibility, we need to stay below 1224.57, even though taking it out doesn't invalidate the labelling on Chart 3 above and only taking out 1227.08 will mean that a top was not in at that high.

We also need to take out the low labelled [1] on Chart 3 above at 1218.21 and do so in a very impulsive manner. Taking out that low will keep the bear count on the table but won't mean that its the count that is playing out.

Going on to take out 1194.53 without a new high above 1127.08, will exclude the alternate count shown on the above charts. However, the possibility that 1227.08 was only a 3rd wave high in a 5 wave rally from the August low, as shown on Chart 2 above, will remain. It wouldn't become invalid unless we we're to drop below 1065.21 in an assumed wave (iv). With that invalidation point being so far below the market, we'd just  have to monitor wave behaviour if we do drop below 1194.53, to try to determine if we topped at 1227.08 (Chart 1) or if a further high is still likely once we've seen a larger degree 4th wave correction (Chart 2).

16:17 GMT - SPX Update - close up

Here's an update of the close up chart posted as Chart 3 in Friday's end of day update:

SPX 1 min close up:

The main labelling is from the first chart in my last post. From the high at 1227.08 you have to ignore the degree labels I've used for the main count - I've upped them by a few degrees so that I can label the detail without going too far below miniscule degree. The i and ii on this chart would be the (1) and (2) on the first chart in my last post.

The alternative labelling is the alternate count shown on both charts in my last post which means a further high even on the most bearish count.

For the main (bearish) labelling, I don't really want to see the wave [2] high at 1221.62 get taken out, though it wouldn't be fatal to the bear count - we could just still be in wave [2] or wave ii (ie (2) on the first chart in my last post).

The invalidation point for the bear count remains 1127.08 and as before, until we drop below 1194.53, the alternate labelling suggests we're going to see a further rally.

14:56 GMT - SPX Update

For the moment, the possibility of a top for the rally from the August low remains open since the high at 1227.08 has held so far and we took out the low at 1220.29:

SPX 1 min - bearish count:

The above chart assumes 1227.08 was the end of 5 waves up from the August low. It could, however, only have been the end of 3 waves up as shown on the bullish count:

SPX 1 min - bullish count:

This would put us now in wave (iv) with another high to come to complete 5 waves up.

As you can see on both the above charts, it also remains possible that we're still only in a 4th wave of lesser degree so another high would be due even on the bearish count. That remains a possibility until we take out the high at 1194.53, as mentioned in Friday's end of day update.

So, that's the main level I'm continuing to watch. While we're above it, the benefit of the doubt has to be given to the upside.

20:57 GMT - SPX End of Day Update

So, we have another candidate for a potential top for the rally from the August low. The problem remains, however, that there are various ways to interpret the action so while its possible to count a complete 5 wave rally from that low, its also possible that further highs need to be put in before it is over.

The context for the following short term charts can be found on the 60 min counts page.

Chart 1 shows the count I'm favouring at the moment. It assumes that we put in a top for the rally from the August low today or that we have one more rally to come, but once a top is in, that will result in significant downside (how much will depend on which Option from the 60 min counts page is playing out). 

The following chart is labelled as if Option 2 on the 60 min counts page is playing out so the top for the rally from the August low will be wave X and the decline that follows would be wave Y in an expanded flat type correction. However, it could equally be applied to Option 3 and what that means on Option 3 would depend on which of the three interpretations of that count is in operation (I've listed them on the 60 min counts page) :

Chart 1: SPX 1 min - bearish count:

Here's the more bullish count which has us looking for only the end of the 3rd wave in the 5 wave rally from the August low. Again, its not clear yet whether the 3rd wave, wave (iii), on the labelling in the chart below, has topped or whether a further rally is required.

The chart is labelled as if Option 3 on the 60 min counts page is playing out:

Chart 2: SPX 1 min - bullish count:

On both of the above charts, provided we stay above 1194.53, there is a risk of a further high being required to complete the wave v or wave (iii) labelled on these charts. Taking that high out without a new high above 1127.08 would void the alternate counts shown on the charts.

For the moment, the odds are favouring that the move from the 1127.08 high is a 4th wave on the alternate count shown on the above charts. However, until the high at 1127.08 gets taken out, its possible that it could be the first and second waves down in a larger decline.

Here's a close up of today's move. Ignore the label degrees - they're just for illustration, so the low labelled as possibly wave (iv) on Chart 3 below would be the 4th waves shown as an alternate count on Charts 1 and 2 above:

Chart 3: SPX 1 min - close up from 1227.08:

So, on the main labelling on Chart 3, there's not much room left to retain its validity if 1227.08 was a top in wave v or wave (iii) on Charts 1 and 2 above. So an immediate drop on Monday would really have to take place. If that doesn't happen, then the alternate that we only completed a 4th wave within wave v or (iii) today will be the count and, as you can see, it appears that we should be into the 3rd wave of the final rally for wave v or (iii) on Charts 1 and 2 above.

So, apart from the 1194.53 high mentioned above, the levels I'll be watching are 1127.80 (if we've topped in wave v on Chart 1 that should remain intact and if we've topped in wave (iii) on Chart 2, it should hold until we see a deeper retracement in wave (iv)) and 1220.40 (that must be taken out if we topped at 1127.08 although of course, it won't exclude all other options).

Have a great weekend!

15:56 GMT - SPX Update

With that push up from where I have the wave [4]  of v label on this chart, its even more possible than it was last night that this may be a complete 5 waves up from 1177.65:

SPX 1 min:

Wave [4] of v is still a little small in relation to wave [2] for my liking, but wave [5] would be quite well proportioned in relation to wave [1]. As I said last night, if we drop now and fail to stay above 1194.53, I'll go with this (though whether the top would be wave (iii) as shown on this chart or wave (v) as shown on Chart 1 in last night's update is still an open question).

While we stay above 1194.53, then the risk of further upside remains. Here's an update to the chart in my last post which shows that possibility, where today's high would be wave [3] rather than wave [5]:

SPX 1 min close up:

13:51 GMT - SPX Update

Still looking at this area as a possible top. Whether its wave (iii) or (v) will remain to be seen. If its a top, an impulsive decline is now needed. In the absence of that, the possibility of further upside remains:

SPX 1 min close up:

9:409 GMT - SPX : Counts from March 2009 and 60 min counts pages updated - despite yesterday's move, there is potentially considerable bearish risk to be aware of

With the move above the April highs yesterday, I've updated the Counts from March 2009 and the 60 min counts pages.

Although the trend remains up, which favours the bullish counts, there is a not insignificant risk that we may be at or near a potentially important top. 

You can see this on the chart of Option 2 on the 60 min counts page and the chart of the 5 wave impluse on the Counts from March 2009 page, which implies a move down in a Y wave which could take us to the 950  to 875 area. Also, on the bearish interpretation under Option 3 on the 60 min counts page (and as shown on the chart of the triple zig zag on the Counts from March 2009 page), we could be at or near the start of an even more significant decline.

However, as long as we're above 1039.70, the bullish counts are the most likely to be playing out (see the very bullish and moderately bullish interpretations  under Option 3 on the 60 min counts page).

20:38 GMT - SPX End of Day Update

The most bearish of the bigger picture Options, Option 1 on the 60 min counts page, was invalidated today with the move above 1219.80. That leaves Options 2 and 3 still open. Option 2 is bearish near term once we see an end to the rally from the August low. Option 3 is potentially very bullish, but may now be potentially very bearish if today's rally marks the whole of wave C on that count. You can see the possiblities under Option 3 as well as the bigger picture for the following charts on the 60 min counts page.

Whichever Option is playing out, I'm still looking for the end of the rally from the August low. I think it remains open as to whether we're in wave (v) or wave (iii) of that rally. I've separated the two out  for clarity. 

Here's the chart showing us in wave (v):

Chart 1: SPX 1 min - wave (v) of the rally from the August low:

Its possible that we've got a top in at today's high, but its also possible that today's high is only wave iii of (v) and we can expect a larger retracement in wave iv in terms of time, as well as price, next.

Here's a close up chart showing that possibility (its labelled as if we're in wave (iii)):

Chart 2: SPX 1 min close up:

Note the possibility on this chart that wave iv (or (iv) on the count shown on Chart 1 above) was actually at the low of 1183.56 so the 5 waves up that I've labelled from there (up to the red [3]) may be the end of wave v or (v). I'll be watching how the next pullback behaves for clues as to whether this might be the case.

If we do still have wave [4] or wave iv to come, then it has to stay above the wave [1] or i high at 1194.53. If it doesn't then the alternative I've labelled on Chart 2 may well be playing out. 

Chart 3: SPX 1 min - wave (iii) of the rally from the August low:

This is obviously more bullish than the count in Chart 1 above, although once wave (iii) is over, we should see a decent retracement in wave (iv). A 23.6% retracement would take us to about 1178 while a 38.2% retracement would be at about 1152.

So, for the moment, I think the main level to watch is 1194.53. If the next retracement stays above that level then its likely we're going to see a further high to complete wave (v) or (iii). If it moves below that level, it increases the odds that we may have seen a top, either to wave (v) or (iii) for the rally from the August low.

17:52 GMT - SPX Update

Here's the 1 min chart I posted earlier, which I've updated:

SPX 1 min:

We could well have seen the end of wave [3] of v, with a pullback in wave [4] now in progress. If so, the 23.6% retracement is at about 1209 and the 38.2% retracement is at about 1204, so those might be levels to watch for a potential low for wave [4].

If this is wave [4] and the labelling as shown is correct, we have to stay above the wave [1] high at 1194.53 in wave [4]. If we take that out, then the other possibility I mentioned in my earlier post, that wave iv should actually be at the 1183.56 low, may well be playing out. That could mean that wave (iii) or (v) has topped. If its the latter, that's likely to result in quite a significant decline.

Its also possible that we're still working on wave (5) of [3] as shown on this close up chart:

SPX 1 min - close up:

If we take out the low at 1214.05, that will suggest that wave [3] topped as shown on the first chart above (though it won't rule out the possibility that we're still in wave (4) of [3].

So, lots of possibilities, but for the moment, the focus still needs to be on the upside until such time as we see something clearly impulsive to the downside.

14:16 GMT - SPX Update

Today's move means that Option 1 on the 60 min counts page should now be disregarded since all other indices have exceeded their April highs. So that leaves Options 2 and 3 on the bigger picture.

I'm still looking for a top to the rally from the August low. With the potential ending diagonal counts posted yesterday both invalidated, that leaves the following which puts wave (iv) back to where I had it previously:

SPX 60 min:

The labelling on the above chart is what I've been referring to as the less bullish option because it required only one more move up to complete the rally from the August low. The more bullish option has looking for the end of  wave (iii) rather than wave (v) of the rally. 

Here's a closer look at the count, with the more bullish option shown as the main labelling:

SPX 1 min - close up:

It looks like wave [3] could do with another push up to complete.

Note that wave iv or (iv) could very easily be placed under the low at 1183.56, in which case, if there is another push up to come, it may well complete wave (iii) or (v). I'll be looking at the character of the next decline once it appears that we've got 5 waves up from 1183.56 to try to determine if it may mark a top.

22:58 GMT - SPX Update on the ending diagonals

Here's a wider perspective of the count shown in Chart 3 of today's end of day update. Its a 60 min chart of the rally from the August low. The labelling relates to the alternate count shown on Chart 3 which has us in the final wave (v) of [i] of C (the count that has us in a wave C up is Option 3 on the 60 min counts page):

SPX 60 min - 5 waves up from the August low:

If we're in wave v of (v) as labelled, then wave v must stay below 1202.64 in order to remain shorter than wave iii.

As mentioned in the end of day update, its possible that we're still in wave iii rather than in wave v. If that's the case, then wave iii must stay below 1201.76 in order to remain shorter than wave i.

So, if this ending diagonal is playing out, those are the limits within which it has to stay in order to comply with the elliott wave rules applicable to ending diagonals. 

If this ending diagonal is invalidated, there's still the ending diagonal shown on Chart 1 in today's end of day update. If we're in wave v of (v) in that diagonal, then it has to stay below 1208.59 to remain shorter than wave iii. If we're still in wave iii, then it has to stay below 1208.13 to remain shorter than wave i.

By the way, remember that this count for 5 waves up from the August low can be applied equally to the most bearish longer term count (Option 1 on the 60 min counts page) and the moderately bearish count (Option 2 on the 60 min counts page) instead of how I showed the labelling on Chart 1 in today's end of day update (which was labelled as if Option 1 is playing out).

20:21 GMT- SPX End of day Update

The bearish count as previously labelled was invalidated following the Fed decision today, but here's what I'm now looking at:

Chart 1: SPX 60 min - bearish count:

As you can see, its another ending diagonal.

Here's a close up from the wave (iv) low at 1159.71:

Chart 2: SPX 1 min bearish count close up from 1159.71 low:

Its possible that we're still in wave iii of this diagonal. rather than wave v as I've labelled it. If we take out the low at 1171.70 without a new high first, I'd consider this diagonal complete.

For the bullish count, I've re-arranged it to try to accommodate the action today. It could be counted as another diagonal to complete wave (iii) or wave (v) on the alternate labelling:

Chart 3: SPX 1 min bullish count:

If this diagonal is playing out, its possible that we're still only in wave [3], so we still have more upside to come to complete it. Taking out the low at 1177.65 would suggest to me that the diagonal as labelled is complete.

However, its possible that the whole sideways move from 1189.43 is a large triangle for wave iv (or (iv) on the alternate count) with the [E] wave at the low of 1183.56. The move up from there would be part of wave v of (iii) or wave (v). If we take out the low at 1183.56 at this stage then I'd consider that today's high marked the end of wave (iii) or (v) and that we'd now be correcting down in wave (iv) or wave [ii] of C.

So, on these counts, the levels to watch are 1183.56, 1177.65 an 1171.70.

While we're above these levels, the odds favour further upside, whether on the bullish or bearish counts.

15:22 GMT - SPX Update on the bullish count

We may have seen a top on the bullish count today, in either wave (iii) on the main labelling or wave (v) on the alternate labelling. In either case, if we don't take out the low at 1177.65, there remains the possibility that we've only seen the 1st wave of (iii) or (v) today:

SPX 1 min - bullish count:

14:39 GMT - SPX Update on the bearish count

The 1196.14 high remains stubbornly intact, so the bearish count remains on the table - how long for, we'll see. Still, here is how I'm counting it:

SPX 1 min - bearish count:

The diagonal for (C) of [Y] may be complete with a truncated 5th wave. If not, the 5th wave can't exceed 1196.64, but obviously, on the bear count, we have to stay below 1196.14 for that to remain valid.

13:30 GMT - Dollar Update

Here's a possible way to label the move in the dollar since my last update on 30 October. This 80 min chart is updated from that post:

Dollar 80 min:

A possible ending diagonal for wave (v) of [v] of C  which would be a truncated wave (v)? Well, its worth considering, though bear in mind, it could be a leading diagonal for wave i of (v).

If the alternate count on the above chart is playing out, then this diagonal may be (C) of [Y] of ii with iii up now about to start. This 15 min chart updates the 10 min chart in the last post:

Dollar 15 min:

Taking out 78.273 would mean there's a very good chance that we've bottomed on the dollar. While we're below that, the risk of further downside is high.