Saturday, August 8, 2009

SPX-8-7: One Interpretation




A closer look of the throw-over.



This has been a very challenging 3 1/2 weeks trying to interpret the structure. It appears we have several out there now.

My chart above is one interpretation that looks pretty good to me. I have Minute v circle of Minor A now complete (with a possibility of it nearing completion. Surprise here huh? Hey, have to always leave room for alternatives).

I believe Minute V formed an expanding diagonal and with that completed Minor A. Here are a few factors which lead me to choose this as my best count:

1. Just solely on form, it looks like an expanding diagonal.
2. Notice the fifth wave of the expanding diagonal. There appears to be a throw-over of the upper trend line. This is very common in diagonals (EWP pg. 38).
3. All 5 sub-waves appear to be zigzags. This makes sense since the structure the past few days have been a challenge to count.
4. Ending diagonals appear in the fifth wave position when the preceding move has gone too far too fast (EWP pg 37). I don't think anyone will contest the too far too fast argument.
5. The fact that price broke above 1014 intraday but closed below. This is significant to me because 1014 is the 38.2 retracement of the downtrend which began at the Oct 2007 top (1576) thru to the Mar 2009 low (666). 1014 may turn out to be a serious resistance level.

So once again, we will see what plays out next week.

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