Monday, November 2, 2009

11/2 - SPX UPDATE: Wave (v) ED

15 min

There are several counts out there that appear to be very legitimate. Counts aside, I believe 1020(+/-5) will hold as a minute [i] with a minute [ii] bounce somewhere between 1060 and 1074. How and when we get there is up for interpretation.

At the moment, there are three counts that I am focusing on. I list them below in order:

Option 1: Wave (v) Ending Diagonal (Charts above)

I have to give credit to Chucker (who posted this count on EW TRENDS) for this count.

I like this potential count. As you can see price is starting to wedge, which is indicative of a possible ending diagonal.

I did not want to add the Fibonacci retracements on the chart (because I didn't want to overwhelm the chart with more lines) but wave ii is just shy of a 61.8% retracement of wave i and wave iv retraced wave ii almost exactly 61.8%.

Based on EWP guidlines, these are typical retracement levels for an ED. According to EW rules, the current structure has wave iii shorter than wave i and wave iv shorter than wave ii.

If this count is correct, I would expect the final wave v to find the bottom trendline near 1024 and possibly 1020 on an overthrow before minute [ii] reverses sharply as expected with ending diagonals.

On the 15 min chart, the squiggles appear to count as 3-wave structures, a requirement for EDs. Some may say that waves i and iii look like 5-wave structures and this would be acceptable since the guidelines states that wave 1, 3 and 5 in EDs sometimes appear to be impulses(EWP pg 88).

Option 2: Minute [ii] in progress

I believe Daneric has a count showing minute [i] complete at 1029.38 with minute [ii] in progress.

Option 3: 1-2s

Columbia1 has us in a series of 1-2s. This count will have us stair-stepping lower beyond 1020 with wave 3 taking us lower.

What I'll be watching for tomorrow:

- If price drops but holds at 1020, the ED played out and we should expect minute [ii] to reverse sharply higher.
- If price takes out 1052.81, the ED count is out and minute ii is in progress per Daneric's count.
- If price breaks below 1020, Columbia1's count is the one to watch.


  1. Grand, thanks for all the options and thoughts. Right now I am at a loss and just sitting in cash until things decide which way they are going. I sort of like option 2, butnot enough to go long right now...

  2. msswamprat,

    thnk u for the comment and kinds words once again. sitting on cash is never a bad thing.

    right now with futures action, it appears opt 1 is gaining momentum with opt 2 not far behind. i still think 1020 will serve as strong support so i think opt 1 is possibly playing out.

    of course opt 2 is not out unless 1029 is taken out.