21:22 BST - SPX Update

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

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

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c).

Here are the 10 min charts of each Option:

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

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

Option 3 - from 1010.91, a triple zig zag:

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

Option 4 - from 1010.91, a double zig zag:

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

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

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

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

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

SPX 1 min:

As anticipated in last night's update, we did take out the 1088.01 low, so that precludes a further extension of the zig zags shown on the charts of Options 1, 2, 3 and 4 (it was precluded on Option 5 when we dropped below 1107.17 yesterday), at least on the labelling shown on those charts.

You can see from the 1 min chart that the decline from 1129.24 does look like its forming an impulse wave. On the main count I have on the 1 min chart, we haven't quite completed 5 waves down from that high, though I've noted on the chart the possibility that we may have. The main count has us in wave [4] of i down.

If the main count is correct, a 38.2% retracement would take us to about the 1095 area. Its possible that its complete today. It would be a shallow retracement, falling short of even the 23.6% level at 1088.60, but that would still be acceptable for a 4th wave. If there is more upside to come, then wave [4] would have to stay below the wave [1] low of 1111.58.

If we take that out, then, for the bearish case, we would have to switch to the alternate count mentioned on the chart, that today's low was wave [5] and wave i, so we would now be retracing back up in a wave ii. For the bearish count to then remain valid, wave ii must not, of course, exceed the high of 1129.24.

If we were to exceed that high, then, obviously, something potentially more bullish is playing out. One possibility would be the bullish alternates I have been posting under Option 4. You can see the bigger picture of the bullish alternate  on the second chart under the Zig Zag from March 2009 page, where it is shown as the alternate count.

I have two possible ways to count this bullish alternate:

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

This count has altered since last night with the break of the low at 1088.01. It was a [i]-[ii]-(i)-(ii)-i-ii. Now its just a [i]-[ii]-(i)-(ii), with wave (ii) being an expanded flat. It may not be pretty, but it looks valid. It won't be eliminated until we drop below 1056.88.

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

This count will only be invalidated if we drop below 1010.91. However, you'll see from the Zig Zag page referred to above and from the Impulse from March 2009 page, that even taking out that low does not mean that we are headed down in the out and out bearish counts (you can see the longer term perspective for these and the extremely bullish count on the Long Term Dow Counts page). Those counts can accommodate a decline to well below that level (especially in the case of the impulse count from March 2009) and yet still lead to higher all time highs in the not too distant future.

So, with bullish counts still on the table, looking at where we are now, the warning signs for a potential problem for the bearish case will be if we take out 1111.58 in this assumed wave [4] that I have shown as the main labelling on the 1 min chart above. 

Doing that will potentially leave only a 3 wave decline from 1129.24.

It could still be that we are in a very bearish count, if today's low was only wave (1) of [3] - a possibility I showed might be playing out in last night's update. That would be invalidated if we take out the high at 1127.16 and would be the second warning of something amiss with the bearish count.

The final warning would come if we take out 1129.24 since that would preclude the alternate count shown on the 1 min chart above, that we had completed a 5 wave impulse down from 1129.24.

So, those are the levels to watch for signs that thie bearish count shown on the 1 min chart above is wrong and that we may be seeing something more bullish occuring.

To the downside,  the level we need to take out to provide further encouragement for the bear case is 1010.91, although, for the reasons mentioned above, it still won't be conclusive.

19:00 BST - SPX Update - 60 min chart

Here's an update of the 60 min chart (last posted here):

SPX 60 min:

I could be wrong, but it seems to be suggesting the risk  for more downside - see the notes on the chart. Maybe we get nearer to the lower line of the orange fork before a more significant rally. Of course, the picture is always changing, so its worth keeping an eye on these 60 min indicators in case they start turning around.

17:03 BST - SPX Update - 1 min chart

Its starting to look like we may have had a wave [3] (or [5]) low today. The retracement up from that low looks too big to be a wave iv of 3 or a wave 4 of (5) (see my earlier post), though of course, they break no rules so the count shown earlier could still be correct. However, here's an alternate to consider:

SPX 1 min:

Making wave (4) a triangle ending at 1091.02, means that today's opening drop was wave (5) and wave [3], so we'd now be in wave [4] up, with, possibly, a leading diagonal for wave (A) of [4].

Its possible that today's drop was only wave 1 of (5) - taking out today's low at 1076.69 without a deeper upward retracement first would bring in that possibility.

If we're in wave [4], ideally it won't get too much above a 38.2% retracement level at about 1096 - the congestion formed by the triangle may well provide resistance to a wave [4] advance. Wave [4] can't end above the low of wave [1] at 1111.58. If we exceed that level  then we are likely in the alternate count mentioned on the chart.

If we're in the alternate count, making the low wave [5] and wave i, we'd expect a higher retracement in wave ii,  perhaps to 61.8% of the decline from 1129.24, which is at about 1109.

If we've formed a wave [3] or [5] bottom today, we should get a decent retracement before we take out today's low. If we don't and we just drop again,  the count shown in the earlier post or the possibility of an extending wave (5) mentioned above will arise.

16:09 BST - SPX UPdate - 5 min pitchorks

Some interesting fork action going on on the 5 minute chart:

SPX 5 min pitchforks:

You can see price broke down out of the green fork on Tuesday's gap down and the rally later on Tuesday was a back test of the broken lower line of that fork. It also created a high from which the downward blue and red forks could be drawn.

Yesterday's decline took price quickly down to the lowerline of the blue fork and it pretty much chopped around there for most of the day, which was bearish.

This morning's gap was a bearish break of the blue fork and took price to the median line of the steeper red fork. Its bounced from there but, so far, it looks like a backtest of the broken blue fork.

If things are really bearish we should fail here and drop back to the median line of the steeper red fork and then below that too.

Obviously, in elliott wave terms, if we completed three or five waves down from 1129.24, we might expect more of a bounce back up. In that case, I'd look to the upper line of the red fork and the median line of the blue fork to provide some resistance. They're not guaranteed to hold price back, but its a place where you might be on the look out for a possible reversal back down.

14:57 BST - SPX Update: 1 min chart

If this were to play out as we would expect on this labelling, we need a  another drop to complete 3 of (5) of [3] , then a 4 and 5 to complete (5) of [3]. We'd then see a wave [4] rally before a decline in wave [5] to complete wave i down:

SPX 1 min:

Once we see a complete wave 3 of (5) down (assuming it hasn't yet completed - it doesn't look complete, but squiggles are difficult to count sometimes and/or can be misleading), the wave 4 rally must not end above the wave 1 of (5) low at 1088.62. If it does, then we'd have to assume we'd seen the end of wave [3] and would be retracing up in wave [4]. In fact, any move above that level without a new low first is going to make me think a short term bottom (on the bearish count) is in.

Note also the alternative count, that the drop today will be wave [5] and i, not wave [3]. If that's the case, the retracement would be wave ii and is likely to be deeper than if its only a wave [4] retracement.

14:20 BST Dollar Update

Here's an updated 20 min chart of the dollar zooming in on the rally from the 6 August low at 80.085 (see the last update here):

Dollar 20 min:

I'm inclined to count the rally from the low as waves i, ii and iii up. On the bullish case, this would be the very initial stages of minor wave 3.

I'm not sure that wave iii is complete, but it looks like it could be there or thereabouts. Having said that, if we're in wave [5] of iii, it could extend higher, as 5th waves seem to be prone to do sometimes in currencies.

If the count is correct, then we should be about starting wave iv. We'll know its wrong if we take out the wave i high at 81.534, so that's the level to watch for the moment on this count. Preferably, if its wave iv, I'd like to see it bottom around the 38.2% retracement level, about 81.968. Anything  too much lower might start to raise suspicions that something else is happening.

If we do drop below 81.534, its possible that the high at 82.786 is actually wave i (or wave (i)) and that we would be in a wave ii (or (ii)) downward retracement. In that case, we'd need to see the low at 80.085 hold, otherwise, the count would be invalidated as far as it puts us at the start of minor 3 up. If its a wave ii (or (ii)) retracement, the 61.8% retracement level  at about 81.115 may be an area to look at for signs of a reversal back up.

On the bearish side, its possible to count 5 waves down from the 7 June high to the 6 August low, as you can see from the alternative count I've shown on this 60 min chart:

I would count that as wave A, with the rally from there being wave B, assuming the decline from 7 June is wave (2) down, so an overall bullish count. If we're now in wave B on this alternative count, with 5 waves up, it looks like its forming a zig zag, so after a 3 wave pullback, we'd expect another 5 waves up before we get the wave C decline.

Five waves down from 7 June, however, could, of course, also be something much more bearish, which is why the low of 80.085 is extremely important to the bullish case.

12:46 BST - Equity Options Put/Call Ratio and Percent of S&P stocks above the 50ma

Here's how the daily CPCE chart looks after yesterday's decline (updated from 7 August):

CPCE Daily:

You can see that we're still stuck just below the blue dotted line. The 5ma has crossed above the 10ma, which is good for the bearish case, but we need more. We need to clear the blue dotted line and get above the red dotted midline of that upward channel (which I first sketched in on 25 June). 

At the moment, the moving averages of the CPCE remain in a similar configuration as when we saw the grind up in the markets in August/October 2009 (the green highlighted area). That's why I think its important that we get above and away from the blue dotted line. Otherwise, the risk is that price just does what it did then.

Though the CPCE chart isn't yet confirming the bearish case, the failure of the Mcclellan Oscillator when re-testing the upward red line and its failure to get above the downward blue line, plus yesterday's drop below  zero should provide encouragement for the bear case. 

And here's something else that may be supporting that case:

Percent of S&P 500 stocks above the 50ma:

I use a 13ma with this because I've found that when the line crosses above or below, its usually a decent signal to buy or sell. Of course, its not 100% reliable, nothing is. But, it has caught some major moves at a reasonably early stage, as you can see from most of the red (sell signals) and green (buy signals) lines.

Currently, the line has crossed below the 13ma (it actually crossed marginally on Tuesday, prior to yesterday's steep decline). Generally, staying short while the line has been below the 13ma has been a good trade. Obviously, at such an early stage, there is the risk of being whipsawed, but that's trading.

If we see the 13ma really get going to the downside with price staying below it,  past behaviour suggests that it ought to be reasonably  safe to look to price action, elliott wave counts or whatever technical analysis you use, to enter or add to shorts. Worth keeping an eye on.

11:50 BST - SPX Daily Chart Update

Yesterday I posted a 60 min chart of SPX which showed that the bearish signs that had been appearing on it since around the end of July (click here to see how it looked at the end of July) based on standard technical analysis had finally manifested themselves in price action.

Here's the daily version of that chart:

SPX Daily pitchforks:

You can find the last posting of this chart on 7 August by clicking here. I've left most of the comments on the chart as they were at the time I last posted it since they set out the issues that there seemed to be against the bullish case and which may now be playing out in price action with yesterday's decline.

Since I last posted it, those bearish signs have got worse, so the bearish case seems to be asserting itslef against the bulish signs that were mentioned in my 7 August post:

1) the CCI has made a definite turn down from the zero line (the failure to get above it despite the undoubted extent of the rally in July seems very bearish);

2) price, which had resumed its crawl up the lower line of the blue fork and appeared to be trying to make it to the midline of the upward dark green fork, has now completely backed off both. The failure of price to get to the midline of the dark green fork during the last push up which resulted in the choppy sideways action we saw earlier this month was a sign of weakness (I mentioned this in the 7 August post). Price is now coming down to the lower line of the dark green fork and the midline of the downward red fork. If we're going to get follow through to the bearish case, those will be broken to the downside. Otherwise, we could be in for more choppy action;

3) the MACD histogram, which had been diverging bearishly against price  for some time, went negative yesterday signifying a bearish cross in the MACD itself. The similarity between the behaviour of these two indicators now and what they did prior to the April top remains: the histogram diverging against price while the MACD itself rose, suggesting underlying weakness despite the rising MACD line;

4) the RSI, having continued to fail to get to the bullish level of 66.67, has now fallen back below 50, possibly confirming that the July rally was countertrend. Really though, we want to see the RSI get to the bearish level of 33.33 and stay down there if the bearish case is to play out;

5) the stochastic has a triple top in place.

Despite yesterday's large decline, the indicators suggest there is alot more room to the downside - this may well be confirmation that its the bearish counts that we should see play out over the next few weeks. 

However,  remember that bullish counts remain on the table. The main one I have isn't invalidated until we drop below 1010.91 - see last night's update for more detail and the links to which it refers.  So really, for the bearish case, we're going to want to see price take out that level before the indicators start to show bottoming signs or even bullish signs ( I should also mention that the bear case is not sealed even if we drop below 1010.91 - you can see from the chart on the "Impulse from March 2009" page and the alternative counts on the charts on the "Zig zag from March 2009" page that those ultimately bullish counts are not eliminated by taking out that level).

Of course, it may be too much to expect a straight line drop even if the bearish case is playing out. As mentioned in my post of the 60 min version of this chart yesterday, there are signs that we should at least be prepared to see a bounce of some sort. The current elliott wave counts would tend to support this as you can see from last night's update, though its feasible that we decline more before a proper retracement. As mentioned in one of my 1 min chart updates yesterday, if yesterday's drop is wave [3], it would be a 2.618 extension of wave [1] at about 1081. At the moment that wave is somewhere between the 1.618 and 2.618 extension levels. It would be nice and neat of we could get to the latter. 

When we do get a bounce, we'll need to monitor it to see if we can get an early warning that it might be something more bullish than a normal retracement in a downtrend. I identified some levels to watch in last night's update which might help on this, assuming the count shown is correct.

So, we had a nice decline yesterday which has given some credence to the bearish case. However, with bullish possibilities still very much alive, this is no time for complacency on the bearish side (not that there is ever a time for complacency in the market). Trading is a process of continually monitoring and adjusting as price action develops and not taking anything for granted.

21:41 BST - SPX Update

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

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

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c).

Here are the 10 min charts:

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

I'm still only showing the 10 min chart of Option 2 since the counts are now the same under both these Options, namely, a single zig zag which is complete at 1129.24. Here's a more zoomed in look on the 1 min chart I've been posting:

SPX 1 min:

I've amended the labelling slightly from earlier, but overall, the bearish count I showed at the end of yesterday seems to be playing out, so far.

We've taken out three of the levels I mentioned in last night's update, so excluded the near term bullish counts that remained while those levels were intact. 

However, for the moment, the main level I was watching, 1088.01, remains - but only just.  Taking out 1088.01 would provide a higher degree of confidence in a top since that's the last low that has to survive if wave c is going to extend. on this labelling.

If the labels on the 1 min chart above are correct however, we should take out 1088.01 very soon.

However, taking it out doesn't mean we can assume that  its all down from here. There are still bullish counts on the table - see under Option 4 below. So we just need to keep monitoring important levels as the price action develops to try and get an early warning that a bullish count is more likely to be playing out and that this count is wrong.

On the labelling in the 1 min chart above, if we have completed or nearly completed wave [3] down, the next retracement would be wave [4]. Wave [4] cannot end above the wave [1] low at 1111.58, so, if we retrace up to that level in an assumed wave [4], that may well be an early warning that something is amiss with the bearish count.

It won't be conclusive, because we could be in the [1]-[2]-(1) count I had on the 1 min chart earlier, with wave (1) of [3] being the wave that is complete or nearly complete. In that case, we could retrace all the way back up to 1127.16 and the bearish count could stand -it wouldn't be very pretty and I think if we were to get such a retracement, we'd have to be very cautious of the risk that the action was telling us that the bearish count is not in play.

Nevertheless, from an elliott wave stand point, 1111.58 and 1127.16 are the levels to watch to the upside.

To the downside,  the level we need to take out to dismiss the bullish count shown below is 1010.91.

Option 3 - from 1010.91, a triple zig zag:

This too, can count as complete at 1129.24 and that's how I've labelled it for the time being. Of course, 1129.24 must remain intact if that is the case.

The count from the high at 1129.24 is the same as shown under Options 1 and 2 above, so please refer to the 1 min chart posted above and the comments there about the levels to watch.

Option 4 - from 1010.91, a double zig zag:

This double zig zag can also count as complete at the 1129.24 high. The count from there is the  same as the count from that level under Options 1 and 2, so the comments made there apply here also.

This is the bullish alternative count mentioned above (see the alternative count on the second chart under the Zig zag from march 2009  page for the bigger picture).

Here it is on a 1 min chart:

SPX 1 min - Option 4, bullish alternative count:

Technically this remains valid as labelled since we haven't taken out the 1088.01 low. However, it may be more likely that wave (ii) is forming an expanded flat as mentioned in my earlier post today, or that we have seen a leading diagonal up from the July low as shown in this chart which I've updated from that earlier post:

SPX 60 min - bullish alternative leading diagonal wave A:

You can see that I've labelled the 1129.24 high as wave A, but it could be wave [i] of A.  Whatever it is, the retracement could be almost done as a zig zag.  However, a normal retracement of a diagonal is considered to be 78.6% - that would take us down to about 1036. Having said that,  in elliott wave terms, once we can count 5 waves down from the high that I've labelled (b) of B, we should be on alert for a rally back up in C or [iii] of A, regardless of whether or not we have reached the 78.6% retracement.

Obviously, any retracement must stay above 1010.91 for this count to remain valid.

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

A complete ending diagonal can be counted into the high at 1129.24. I've labelled it as such. Taking out 1107.17 today has precluded the possibility of a continuing wave v.

So, the count down from 1129.24 is the same as for Options 1 and 2 so please refer to the 1 min chart and the commentary there as they apply here also.

19:45 BST - SPX Update - 60 min chart

This is the 60 min chart I've been posting since 30 July highlighting bearish signs that seemed to be appearing, warning of a potential end to the rally from the 1 July low (you'll find the most recent posting of it here) :

SPX 60 min:

These bearish signs seem finally to have played out in price action. 

However, you'll see that we've now come down to the bottom of the first area of support at 1088 which is also the lower line of the downward purple pitchfork  and the 200ma - not surprising then, with such a confluence of  support areas that today's down move has been stalling in this area for a couple of hours.

The indicators may be signalling a bounce could be due - you can see them highlighted by yellow circles: the RSI is at 30 and looking like it might turn up; the MACD histogram looks like the latest two bars have formed   higher lows; and the Slow Sto looks like its curling up from oversold levels.

These aren't necessarily buy signals (if tempted to have a punt on the long side, I'd drill down to a much smaller timeframe to find an entry with a tight stop), just perhaps warnings to be prepared for a bounce while these indicators work off their currently oversold conditions. If things are extremely bearish, they'll do that without much of a bounce in price, but its quite possible that they just stay oversold and price continues to tumble.

For the moment at least, price action and internals suggest that long positions are risky. Of course, in recent weeks, things have had a habit of turning around sharply just when it looked like a new downtrend had begun, so we can't rule out a sudden turn around. 

When we do get a bounce,  much will depend on the way it behaves - if looking for further downside, we don't want any bounce to look too impulsive. Of course, any corrective bounce needs to be in 3 waves  and preferably, if today's low is wave (1) of [3], a bounce will not get too much above the 61.8% retracement level at around 1113. If its wave [4], then it has to stay below 1111.58 (the wave [1] low) and preferably it should stay around the 38.2% retracement level at about 1103.

Three wave bounces into these areas may be worth shorting given the internals, but of course, stops are vital in case the bounce turns into something more bullish. Of course, these levels will change if we drop further before any significant bounce, but you get the idea.

17:14 BST - SPX Update - the bullish count

The bullish case is down, but not out at the moment. The main bullish count that could lead to new highs above 1219.80 is explained under Option 4 on the 60 min counts page and shown  close up in last night's update. Here's how the count shown in last night's update looks at the moment - I've updated it to take account of today's decline:

SPX 1 min - bullish alternative under Option 4:

If we take out 1088.01, this [i]-[ii]-(i)-(ii)-i-ii count is out. We could still be in an expanded flat wave (ii) however - that would only be invalidated below 1056.88.

If we were to take out 1056.88 as well (perhaps not today!), then this bullish alternative would need to be adjusted to the leading diagonal possibility I referred to last night, which always has to be considered when you see what might look like a series of ones and twos. Here it is on a 60 min chart:

SPX 60 min - bullish alternative under Option 4: leading diagonal:

As noted in last night's update, this count would stand until we take out 1010.91, so the bearish case could still disappoint until that level goes.

You'll see from the chart that the leading diagonal could be all of wave A of the third zig zag from the March 2009 low (see the alternative count on the second chart on the "Zig Zag from March 2009" page for the bigger picture), or it could just be wave [i] of A. The latter would obviously be very much more bullish.

The bad news for the bears is that even if we take out 1010.91, it doesn't mean we're on our way to zero. You'll see from the page entitled "Impulse from March 2009" that the count shown there can accommodate a decline below the 1010.91 low in a wave (2). This is something to be on guard for because if we take out 1010.91 and it turns out that this is the correct count, it could catch alot of shorts on the wrong side.

16:42 BST - SPX Update

Here's an update of the 1 min chart posted earlier:

SPX 1 min:

I'm showing a completed wave (1) of [3] down, but this could be wave [3] itself - its done enough to count as wave [3] and has left enough room for a wave [4] correction which doesn't have too much risk of overlapping wave [1].  

I'm not sure yet which to favour but if we take out 1111.58 (wave [1] low) today's low can't have been wave [3] and its more likely its wave (1) of [3] as suggested by the main labelling.

Obviously, there's a possibility that we still haven't bottomed, but it can be counted as a complete 5 waves down from 1126.16, so that's what I've gone with for the moment.

If we haven't yet bottomed, the drop from 1126.16 would be a 2.618 extension of the drop from 1129.24 to 1111.58 at about 1081. If we drop that low without a retracement first, I'd be more inclined to count the drop from 1126.16 as wave [3].

15:16 BST - SPX Update - 1 min chart

For the bearish counts which have us having topped at 1129.24, here's the 1 min chart I posted yesterday brought up to date with today's drop. I've amended the degrees for the decline from 1127.16 to show us in only wave (1) of [3] at the moment. If its right we're possibly in wave 4 of (1) (but we could still be in wave 3). If we're in wave 4, I've shown the retracement levels and, of course, we can't end wave 4 above 1119.42:

SPX 1 min:

Of course, its not impossible that today's low is wave [3] and we now go sideways in wave [4] - if this is playing out, we can't exceed the wave [1] low at 1111.58.

Please also remember that bullish possibilities remain until we drop below 1088.01 - see last night's post for details.

11:36 BST - Dax Update - Possible top in the Dax?

In my last post on the Dax, there seemed to be a possibility that a top could be near, although it was by no means certain. Since then, we did make another new high, as was expected under the elliott wave count, but it was not much higher than where we were at the time of that last post.

In the light of subsequent action, I've relabelled the 15 min chart to show a straight impulse wave up from the minor B wave low at 5906.04 to the current high at 6386.97. Please refer to the previous post for the daily charts and a wider view of the 15 min chart - the one below zooms in to look at the move from the minor B low:

Dax 15 min:

You can see that from the current high at 6386.97, there appears to be 5 waves down, followed by what has to be a corrective retracement up to 6356.41 (since its now dropped below the low from which it started).

At the moment, this could just be a correction of the rally from the minor B low if wave C is extending or if the bullish alternative I referred to in the previous post is playing out, where that low is wave (X) preceding another zig zag up.  In this case, the high at 6386.97 could be  [i] of C or it could be minor A up or just [i] of A.

As I mentioned in that last post, assuming that wave B, or (X) on the bullish count, was a triangle as shown, we need to drop below the end of the triangle at 5906.04 in order to avoid the rally from there being only part of minor C on the bearish count or all or part of minor A up on the bullish count.

Until we take out that low, the risk of a larger C wave on the bearish count and the bullish count remain on the table.

Assuming we've topped, if we're in wave [3] of iii down on the bearish count, as my labelling speculates, a wave [4] of iii retracement must not end above the wave [1] of iii low at 6275.32. Taking that out on an assumed wave [4] will be a sign that this count may be wrong and that wave C is extending or that the bullish count may be taking hold.

If we get [4] and [5] down to complete wave iii, I'll then be watching the wave i low at 6244.69, since a wave iv retracement must not end above that level.

So, the bearish count is starting to look OK at the moment, but is not assured. We just need to keep an eye on the levels mentioned above and hopefully, doing that will keep us on the right side of things. If waves don't follow through as expected for the bearish count, that's a warning that should be heeded given that until we drop below 5096.04 on the labelling I have, there could be more upside to come, even on the bearish count and the bullish count remains very much alive.

7:31 BST - Dollar Update

Currently, the dollar looks like 5 waves up from the low at 80.085, followed by 3 waves down to the 61.8% retracement level which I mentioned in my previous post. From where I have marked wave ii on the 20 min chart below, it looks like 5 waves up, which could be wave [1] of iii:

Dollar 20 min:

While its starting to look like the dollar may have bottomed at 80.085, I think its too early to disregard the risk of further downside. There are various possibilities which I mentioned in my first post yesterday and on the Dollar page (see menu tab above). You can also see the bigger picture showing how the above chart fits in under those links.

For the moment, if the move up from 80.641 where I have labelled wave ii, is wave [1] of iii up, then that low at 80.641 cannot be taken out. If it is, we may still be in wave ii, but then we have to stay above 80.085, otherwise, what we have seen from that low cannot be the start of an impulse wave up in a new minor 3 uptrend.

If we have started minor 3 up, the next level I would like for to be taken out is 82.085, for the reasons mentioned in my first post yesterday. If we get a good wave iii up, that shouldn't be a problem - if wave iii is going to be a 1.618 extension of wave i, it would reach about 83.018.

21:19 BST - SPX Update

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

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

On the charts of Options 1 and 2, I'm showing a single zig zag. On the chart of Option 3, there is a triple zig zag,  on the chart of Option 4 there's a double zig zag and on the chart of Option 5, there is a single zig zag with an ending diagonal for wave (c).

Here are the 10 min charts:

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

I'm only showing the 10 min chart of Option 2 since the counts are now the same under both these Options, namely, a single zig zag which is complete at 1129.24. Here's a more zoomed in look:

SPX 1 min:

I'm showing a bearish count for the action since 1129.24. Obviously, for this count to remain valid, we need to stay below 1129.24. 

To confirm the bearish count, to the downside, we need to drop below the high at 1117.88 which, on a bullish count, could be a first wave in an impulse up from today's low - taking it out would likely preclude that since it would make the move from today's low a 3 wave affair.

We then need to drop below 1111.58 to avoid a possible 1-2 count up from today's low, which, on this zig zag count would be part of an on-going wave c.  

After that the levels we need to take out are the same as yesterday. Taking out 1107.17 would be the next level to watch to gain confidence in a top. While that holds, we could have a 1-2 up from there given today's action.

However, for the moment, the main level to watch remains 1088.01. Taking out 1088.01 would provide a higher degree of confidence in a top since that's the last low that has to survive if wave c is going to extend. on this labelling.  So, until we take out that level, the risk of further upside remains.

Option 3 - from 1010.91, a triple zig zag:

This too, can count as complete at 1129.24 and that's how I've labelled it for the time being. Of course, 1129.24 must remain intact if that is the case.

To the downside,  the levels to watch on this count are the same as under  the single zig zag under Options 1 and 2. While 1111.58 holds, we could have a 1-2 up from there in a continuing (c) wave; while 1107.17 holds, we could have a 1-2 up from there in a continuing (c); while 1088.01 holds, the risk is that 1129.24 was only wave (a) of the final zig zag.

Option 4 - from 1010.91, a double zig zag:

From the low at 1088.01, the count on this chart is the same as the count from that level under Options 1 and 2, so the same comments apply here.

Don't forget the bullish alternative count (see under the 60 min counts page for the bigger picture).

Here it is on a 1 min chart:

SPX 1 min - Option 4, bullish alternative count:

Given the number of ones and twos appearing there remains a possibility that this is a leading diagonal from the 1010.91 low and the high at 1129.24 could be the completion of it. If so, or if it is nearly complete, I would count it as wave [i] of A and we should see a decent retracement in wave [ii] before a wave [iii] kicks off. Obviously, any wave [ii] retracement must stay above 1010.91 for this count to remain valid.

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

As explained in last night's update, a complete ending diagonal can be counted into the high at 1129.24. I've labelled it as such. However, we must take out 1107.17 to preclude a continuing wave v in progress where 1129.24 was only wave [A] and 1111.58 was wave [B]. 

As yesterday therefore, that 1107.17 level remains important on this count. If the ending diagonal still has more upside, then it has to remain under 1147.91  since wave v must be shorter than wave iii. Moving above that will invalidate the ending diagonal, but one of the other corrective zig zag counts would then simply replace it on this Option.