21:22 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

We stayed below the high at 1150, so the potential ending diagonal that I posted in yesterday's end of day update and updated earlier, remains valid. 

Here it is on the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

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

For this labelling to remain valid we need to stay below the high that I've labelled (2), which is at 1148.63. A move above that would suggest that we are likely to take out the high at 1150, perhaps in one of the alternatives within this diagonal that I set out in my earlier post or on one of the more bullish counts (see below).

Here's a closer look at the diagonal: 

 

Chart 2: SPX 1 min - 5 waves up from the August low close up:

You can see one of the alternatives for the diagonal labelled on this chart, namely, that 1150 was only the end of wave iii and we're now in wave iv. To preclude this, I want to see 1122.79 taken out and/or the dotted line reached. Once we have a wave iv low for this alternative, the limit for wave v would be 27.21 points from that low since wave v must be shorter than wave iii.

The other possibility I mentioned in the earlier post is that we're still in wave v of the diagonal, so 1150 would have been wave [W] of v and we'd now be in wave [X] of v. This would be invalidated if we drop below 1132.09 since that would prevent wave v being a (double) zig zag, which all waves in an ending diagonal need to be. We'd have to remain below 1159.22 in wave v since it has to be shorter than wave iii. If we take that level out, I'd be looking to one of the more bullish counts.

Turning to the more bullish counts, here's the bigger picture: 

Chart 3: SPX 1 min - 5 waves up from August still in progress:

And here's a close up:

Chart 4: SPX 1 min - 5 waves up still in progress, close up:

Here, I think that taking out 1140.26 would start to cast doubt on this count. If we take out 1132.09, I'd be even more doubtful. Taking out 1122.79 would probably put it to bed, though I don't think we can rule out that we are still in wave (iv), so I'd want to see an impulsive move down and a very significant drop below 1122.79 to start thinking about discarding that possibility.

The possible diagonal I've sketched in would suggest more limited upside than the ones and twos labelled. It may be something to keep an eye on, but below 1132.09 it will be invalidated.

So, the levels I'm watching for some sort of confirmation of an end to the rally from the August low are 1140.26, 1132.09, 1122.79. To the upside, if we take out 1148.63, its likely we'll move above the 1150 high. If we're still in an ending diagonal shown in charts 1 and 2 above, the highest we could go is 1159.22. Above that and the bullish counts in charts 3 and 4 will become the focus.

15:53 BST - SPX Update on the potential ending diagonal to complete 5 waves up from the August low

This is a close up of chart 3 from yesterday's end of day update showing the possible ending diagonal for the final 5th wave up from the August low:

SPX 1 min - ending diagonal 5th wave to complete 5 waves up from August low, close up:

As shown by the main labels, we may have completed the diagonal at 1150. Its also possible however, that we're still completing wave v. In that case, we have to stay above 1132.09 to retain a zig zag count for wave v and we have to stay below 1159.22 for wave v to be shorter than wave iii.

However, you can see that the alternate labelling labels the high at 1150 as wave iii, with wave iv now in progress. If that's correct, wave iv has to stay above that dotted line and/or 1122.79. 

Another possibility would be that wave iii is still in progress.  Again, to retain a zig zag count for wave iii, it would then have to stay above 1132.09. To remain shorter than wave i , wave iii would have to stay below 1152.50.

So, these are the possibilities on this potential ending diagonal count. Bear in mind that the more bullish counts shown in charts 1 and 2 in yesterday's end of day update still stand (except the small ending diagonal in chart 2), albeit with some labelling adjustment. I wouldn't rule them out until we take out 1122.79.

21:43 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for the end of 5 waves up from the August low  to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context.

Taking out the high at 1149.92 means that the count in the chart I posted earlier, or some variation of it, looking for further upside is playing out. The question is how much further upside.

Here's the bigger picture for the move up from the August low (labelled as if Option 3 is playing out):

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

If wave (iv) is correctly placed at the 1122.79 low, then there could be a good deal of potential upside to come, though if the diagonal possibility I mentioned when I posted this chart earlier is playing out, it may be more limited.

You'll see I've got an alternate labelling for wave (iv) at the 1132.09 low. Even on this labelling, however, the upside could be substantial.

For these counts, they really need to stay above the wave [2] low at 1141.22. Taking it out would cast doubt on them. Taking out the low at 1132.09 would seriously call the main labelled count into question and would invalidate the alternate labelled count. Taking out the low at 1122.79 would invalidate the main labelled count altogether.

If 1132.09 is the wave (iv) low its possible that we might be seeing an ending diagonal form from there which may have less upside potential. Here's that possibility on a close up chart from the 1122.79 low (this chart is labelled as if Option 1 is playing out):

Chart 2: SPX 1 min - 5 waves up from the August low close up: 

You can see the potential diagonal shown by the green lines. I've put on tentative labels for the diagonal, but we may only have seen the 1st wave rather than waves i, ii and iii of it. If we did complete wave iii at today's high, then wave iv must stay above the dotted green line, otherwise, the diagonal that I've drawn in is off the table. 

Having said all of that, there is a count that may have a top in at today's high or not too far above, as shown on the following chart: 

Chart 3: SPX 1 min - top of 5 waves from August low in at 1150:

 

 

Taking out 1132.09 would give some credence to this count. 

 

So, the levels I'm watching are now 1141.22, 1132.09 and 1122.79.

19:23 BST - SPX Update: Last chance for the immediately bearish count

Its now an 88.6% retracement, so it had better start dropping now if this labelled count is to survive:

SPX 1 min - (1)-(2) down from 1149.92 - last chance:

Taking out that B wave low at 1142.47 might be the first encouraging sign, though not conclusive, that this count might be playing out, but it has to be done in an impulsive manner. Until then, I'd expect more upside, perhaps in the count shown in my last post.

17:57 BST - SPX Update: Do we still have more upside to come before 5 waves from the August low are complete?

If we don't start showing some impulsive downward action soon, I'm going to start thinking that this count (shown on a close up of Option 3 - see the 60 min counts page) for 5 waves up from the August low may be playing out:

SPX 1 min - 5 waves up from August low still in progress?:

If we take out the high at 1149.92, then it becomes the most likely count. Whether wave (v) will form as an impulse or as a diagonal, we'll have to wait and see, but a diagonal would be a possibility, with the 1st wave ending at 1149.92 instead of where I've placed it. 

So, this is something to keep in mind as we fail to make any downside progress.

16:44 BST - SPX Update: (1)-(2) down from 1149.92? Jury's still out

Its a much deeper retracement than I would have liked for this wave - 78.6%. The way I've labelled it, Y=W. If its wave (2) in a new downtrend, then it needs to start falling now or there's a clear risk that we're going to take out yesterday's high and invalidate the labelled count:

SPX 1 min - (1)-(2) down from 1149.92?:

15:17 BST - SPX Update: 5 waves down from 1149.92?

Its possible that we've now seen 5 waves down from yesterday's high. Here it is on chart 2 from yesterday's end of day update:

SPX 1 min - 5 waves down from 1149.92 complete?:

I can't be sure its the end of 5 waves down, but its right at the top of Friday's gap up, so it could be and we might see support come in here, so its a logical place to be on the look out for a low. If things are really weak, we could just continue to fall and fill the gap.

However, you get the idea and whether its bottomed where I've labelled it or there's more to go to the downside first, once we have completed wave (1), then the bounce is going to be critical - obviously, we have to stay below 1149.92 for the labelling shown on this chart to remain valid. Preferably, the retracement will stay between the 50%-61.8% retracement levels, though we know a 2nd wave can retrace more. The deeper it retraces the more doubt that will create that an end to the rally from the August low ended yesterday.

8:22 BST - SPX Update: 60 min time and price chart - early signs of a top, but price and indicators now need to confirm

When I last posted this time and price chart, SPX had broken down into the lower half of the price channel for the first time since the rally that started at the end of August - see last Thursday's post here. To me, this  was an inital sign of weakness creeping into the rally. 

It actually broke down out of the channel at the end of Thursday, though didn't close outside of it. As you can see from the updated chart, Friday's rally took it back up to the mid line of the channel and it duly spent the rest of the day crawling along the underside of the mid line, which was a possibility I mentioned in that post. An inability to get over the mid line would, as I mentioned, also be a sign of potential weakness, perhaps suggesting that an end to the rally would be close:

SPX 60 min time and price chart:

Yesterday, it fell away from the mid line and the rally into the day's high failed to reach it. This looks bearish, coupled with the divergences that I've marked in the indicators between the high in price made on Friday and yesterday's high (along with the larger divergences between yesterday's high and that of 21 Sept).

Still, the RSI and CCI continue to remain at bullish (to neutral in the case of RSI) levels. If we've seen the end of the rally from the August low then I want to see these indicators turn decisively bearish along with a significant decline in price. For RSI that means falling to the 30 level. For CCI that means falling at least to the zero line, but better still, below it and towards the -100 line.

The MACD histogram has turmed slightly negative which means that the MACD itself has had a bearish cross. However, the latter is still above the zero line. It needs to drop below that line to confirm any bearish move in price.

The stochastic has had a bearish cross, but remains in the overbought zone. We need to see it fall quickly to the 50 line at least, with a good decline in price.

You can see that we're coming into the next time line today, so it would be a good area for price to confirm a top to the rally from the August low, even though it has not quite hit the next price level at 1156. If we have seen a top, then price should fall decisively below the channel and not be able to recover it and we should start seeing the downward price levels (in red) get hit. Moves in the indicators as described above that accompany such a price move would help confirm that perhaps a top to the rally is in.

If we don't see all or any of the above, then it'll be a warning to be prepared for more upside. In particular, I don't want to see price decline but the indicators fail to reach their respective bearish/oversold levels, or price go sideways, but the indicators reach their respective bearish/oversold levels. Those combinations of price/indicator behaviour would be potentially bullish in my view. And, of course, if the channel gets broken to the downside, I don't want to see price recover back inside it.

21:16 BST - SPX End of Day Update

On the 3 Options set out on the 60 min counts page, I'm still looking for 5 waves up from the August low to mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 counts page for context (the following charts are based on the bearish count shown in Option 1on that page).

Here's the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

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

Here's a closer look at the action from the wave iv of (v) low:

Chart 2: SPX 1 min - 5 waves up from the August low close up:

I've kept the count in the last intra day post showing 5 waves into today's high at 1149.92.  As I said on Friday, its always going to be difficult to label a wave that shoots straight up and then chops sideways. As I've been saying in the intra day updates, until we see something that is decidely impulsive to the downside, the trend remains up. So, we can attempt to place labels on the move with a view to identifying a potential top, but ultimately, the first indication will be wave behaviour consistent with a top. 

As you can see, I've labelled what may be the start of an impulse move down from today's high. Its certainly more promising than anything else we've seen over the past couple of days and I like the fact that its taken out the low I had labelled as wave [4] of v and moved into the price void created by Friday's move up.

Still, we need to see more - once 5 waves down is complete, for wave (1) on my labelling (as you can see, I've labelled a complete wave (1) as  a possibility),  the retracement in wave (2) will have to stay below the high at 1149.92, obviously. 

 

If it can do that, we need to then see another 5 wave impulse down for wave (3) that is clearly stronger than wave (1) and moves decisively below wave (1) and deeper into the price void created by that straight line move up on Friday. It would be nice if this wave (3) could take out the low at 1122.79, but it may be asking too much. However, what will be critical is that once wave (3) ends, the assumed wave (4) retracement stays below the low of wave (1).

So, there's a wide range to watch - 1149.92 to the upside and 1122.79 to the downside - Friday's move means there aren't really any reference points before that low. However, as this wave down develops, (assuming it does and its not just part of a corrective move prior to further upside) other reference points will be created that can be used to assess whether or not this move down is likely to continue.

19:54 BST - SPX Update: Still waiting for impulsive action to the downside to confirm the end of 5 waves up from August

With the lack of real impulsive downside movement, the trend remains up and the risk that 1148.90 wasn't the end of 5 waves up from the August low played out. Here's a count showing 5 waves into today's high:

SPX 1 min - 5 waves up from August lows complete?:
 

However, until something impulsive happens to the downside, this can just continue grinding up. A 5 wave move that takes out the low I've labelled as wave [4] of v at 1143.73 would be a start.

17:24 BST - SPX Update: (1)-(2)-1-2 down from 1148.90?

Referring to my earlier post, we managed to stay below 1148.90 and appear to have made another 5 waves down:

SPX 1 min - top of 5 waves from August lows?:

However, there's a high risk that 1148.90 was only [3] of v and that what we've seen since is [4] of v, as mentioned in the last post. Until we see something convincingly impulsive to the downside, I think this risk remains.

15:31 BST - SPX Update: Possible end to 5 waves up from August - 1148.90 must hold

This is chart 2 from Friday's end of day update brought up to date with today's action so far. Its possible that 5 waves up from August ended with the ending diagonal shown on Friday:

SPX 1 min - 5 waves up complete?:

Here's a closer look from the wave iv of [5] low of 1122.79:

SPX 1 min - top of 5 waves from August at 1148.90?:

You can see its possible to count 5 waves down from Friday's high. However, its tentative. We now need to see any retracement stay below 1148.90 and form in only 3 waves. Otherwise, this labelling will be invalidated and what we probably saw will only have been the end of wave [3] of v as an ending diagonal.

10:00 BST - SPX: 60 min counts page updated

I've updated the 60 min counts page to show the remaining 3 out of the original 5 Options I was following for the move from the April 2010 high at 1219.80. That page should be read in conjunction with the Long Term Counts page and the Counts from March 2009 page for context.

21:16 BST - SPX End of Day Update

On the 3 bullish to bearish Options set out in Friday's end of day update, I'm looking for 5 waves up from the August low (the diagonal count I'd been following is no longer feasible as I had it labelled). Today's action confirmed that those 5 waves did not complete at the high of 1148.59 since we took that out and hit a new high at 1148.90 today.

The question now is whether that is the end of the rally from the August low which will mark the end of minor 2 (or (i) of [c] of 2) on Option 1, the end of wave X on Option 2 or the end of wave [i] of C (or (i) of [iii] of A) on Option 3.

Please refer to the 60 min charts in Friday's end of day update for context (the following charts are based on the bearish count shown in Option 1 in that update).

In last night's end of day update I identified the levels to watch for the bearish count that had us topping at 1148.59. Both of those levels (1136.77 and 1144.38) were exceeded today, so the bullish count which expected a high above 1148.59 became the main count and, as mentioned above, we duly took out the 1148.59 high.

So, here's the bigger picture for the move up from the August low (labelled as if Option 1 is playing out):

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

Here's a closer look at the action from the wave [1] of iii high:

Chart 2: SPX 1 min - 5 waves up from the August low close up: 

Obviously, labelling a wave that shoots straight up and then chops sideways has its difficulties. There are various ways to label it, as I've shown in the previous two intra day posts.

With all the sideways chop since the initial run up, this is another count I think works OK - an ending diagonal for wave [5]. It may be complete at today's high or that high may only be the 3rd wave of the diagonal - its difficult to tell, but a move below 1146.50 would suggest its complete, if it is a diagonal (if it s not complete, the 5th wave has to stay below 1149.46 on my reckoning since I would have the 5th wave starting at 1146.50 and the 3rd wave is 2.96 points). However, what I would really like to see is the low labelled as wave [4] get taken out in an impulsive 5 wave move.

So, after today's action, the main levels I'm watching are 1146.50, 1144.58 and 1122.79. Taking out the first one would suggest that the diagonal labelled is complete. Taking out the second one would preclude wave [5] subdividing, assuming that the wave [4] label is in the right place. Taking out the third would mean that wave v of (v) is complete assuming that the labelling shown on chart 1 is correct.

Have a great weekend!

20:08 BST - SPX Update: 5 waves up from August low complete?

If we take out the low at 1145.85 now, I'd be inclined to go with the labelling in this chart because taking out that low would invalidate the (1)-(2) of wave [5] that I mentioned in the last post, so we'd have wave [5] ending at 1148.81:

SPX 1 min - 5 waves up from August low complete?:

However, if we take out 1145.85, I then want to see a swift move to below the low at wave (W) which was labelled as wave [4] in the previous post and I want to see all of this happen in a 5 wave impulsive move.

However, if we can't take out 1145.85, I think we have to continue to expect further upside.

19:19 BST - SPX Update: 5 waves from August low complete?

We've taken out 1146.38, now I want to see the wave [4] low at 1144.58 taken out, otherwise, with a 5-3-5 looking wave down from the high, we could just be in wave (2) of [5] if today's high was wave (1) of [5]:

SPX 1 min - 5 waves from August low complete?:

 

18:59 BST - SPX Update - minor 2 top in?

Its possible that 1148.77 was the end of 5 waves up from where I now have wave [4] labelled and I can see a very small 5 waves down from there. (though you can't see it on the chart below). However, I think we need to take out 1146.38 which I have as wave (1) of [5] - until then, its possible that we're still only in wave (4) of [5]:

SPX 1 min - minor 2 top?:

If it is the top of 5 waves up from yesterday's low, we'll now have to wait and see if it was all of v of (v) or just the first wave.

17:32 BST - SPX Update - minor 2 complete with a slight truncation in wave v?

On this bullish count which yesterday was calling for another high above 1148.59, if we have completed 5 waves up from yesterday's low, the question now is whether its the whole of v of (v) or whether its just the first wave of v. If its all of it then SPX will have a slight truncation. The Dow took out its equivalent high, so this might be the kind of divergence that we often see at turning points:

SPX 1 min - minor 2 now complete with a slight truncation at 1147.62?:

Since the Dow exceeded its 21 September high, even if we don't take out 1148.59 to invalidate the [1]-[2] count, this count has to be the favoured one.

So far, we haven't seen any real sign of the market starting to decline here, so although I've labelled 5 waves up from yesterday's low as complete, there is clearly a risk that its not. We need a 5 wave decline as the first sign that a top may be in. Until then, we have to expect more upside. 

16:42 BST SPX Update: ending diagonal to complete the rally from yesterday's low?

On the bearish count that is really it - we have to drop now:

SPX 1 min - top in at 1148.59:

If we don't, that high at 1148.59 is likely to go and that will invalidate this count, and the bullish count could take us to the 1156 level (though it might not get there since the move up from yesterday's low could well be near completion, assuming its the whole of v of (v) of [c] and not just the first wave).

15:15 BST - SPX Update on the bullish and bearish counts

The bearish ones and twos down from the 1148.59 high has been invalidated. I have however got a [1]-[2] count that remains valid unless we take out 1148.59 - I've been trying to find a way to overcome the (1)-(4) overlap in wave [1] and think that the triangle shown in the chart below achieves that since the crucial point in determining overlap is where wave (4) ends - with the triangle for wave (4), it ends below the low of wave (1):

SPX 1 min - top in at 1148.59:

So, 1148.59 is the level to watch on this count.

However, the bullish count requiring one more high above 1148.59 (or 5 waves from the wave iv low) does seem  more likely, but you never know. Here's the bullish count:

SPX 1 min - one more high to come: