Thursday, August 20, 2009

SPX- 8-20 PM Update

Apparently the Wave X Triangle and the Wave C of (X) Ending Diagonal has been ruled out of play (definitely set aside for now) because of some rule violations.

Rule violation for the Wave X Triangle:

The structure exceeded the 5 sub-wave count. Based on the structure today, there appears to be 7 waves. This would be a no-no (This does setup a possibility for a bullish count).

Rule violation for Wave C of (X) Ending Diagonal:

Subwave 4 of the ED, if properly labeled and if subwave iv is truly in place, does not end within the price territory of subwave 1, which it should if it is an ED.

The best bearish count on the table that remains is an X wave of Minor B to connect a double zigzag from 1018. Wave C of X is currently underway and if it equals 2.618x wave A of X = 1014.

Once complete, this would open up a second bearish alternative, a Minor 1 Leading Expanding Diagonal. I will just put this out there because it is hypothetical but just wanted you to be aware of this potential. More on this later if it looks like it truly is developing.

As I previously mentioned ( should this structure turn into a Leading Expanding diagonal, per EWP (pg 40), these patterns usually occur at the start of market declines.

Dan and Kenny have good bullish counts for this leg so I won't attempt (too much work!) to put one out unless I see an alternative.

Whether the bearish or bullish count plays out tomorrow or over the next few days, I think this current leg up is reaching it's apex and is looking to pullback. How large a retracement will be determined by which count (bearish/bullish) prevails.

My target of 965 has not changed. If this turns into a bullish count, I will be looking for the Fibonacci retracement levels once the top is identified.


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