Friday, October 30, 2009

10/30- SPX Line Chart and MACD Histograms

SPX Line Chart

How's this for a simple look? The count looks pretty clear like this.

SPX Support Levels

I've also marked some levels that should act as pivot points/support areas over the next few weeks.

SPX MACD Histograms

I wanted to add an updated chart for the SPX histograms. In my post yesterday, I wanted to give it one more day to see if there was any follow through with a change in trend based on the shortened histogram.

It's a good thing I wanted for confirmation for the reversal because it didn't come. Perhaps the fact that price didn't tag the upper trendline may have been a key signal that momentum was waning and the direction change was coming.

10/30 SPX Weekly MACD Histograms

10/26 SPX Weekly MACD Histograms

Here is an update on the MACD weekly chart. Notice the sudden drop in the histogram? MACD is bending ever so more towards a cross through it's signal line. Based on this analysis, we may be a week or two away from a minute [iii] pullback.

10/30 PM Update: SPX, DOW

SPX 60 Min

SPX 15 Min

Dow H&S

The counts are looking good here. Price has remained within the trend channels so I am going to assume that this is a good count.

I will admit that I moved minuette (ii) over because it was mentioned that alternation would make more sense between (ii) [flat] and (iv)[zigzag]. This adjustment does not change the overall count.

At this time, the primary count is that we are working on minute [i] down. At the close, we were working on subminuette iv of minuette (v). Subminuette iv appeared to be tracing out a triangle.

If so, a final subminuette v is required lower to complete minuette (v). This should touch the lower trendline somewhere near the 1020s. This would make minuette (v) approximately 1.618 x minuette (i).

I previously mentioned that this would be a reasonable level to draw minute [i]. This goes hand in hand with the projection I made with the Dow head and shoulders formation which also applies with SPX. See below for the H&S projection.

Here's an updated look at the Dow I posted on 10/26. I was anticipating a trend change that would draw a leg down to the 9630 level. This would complete a minute [i] wave and it would be followed by a minute [ii] wave to form a right shoulder.

The bearish alternate is still in play. I have labeled the count in red as "Alt".

So far so good. What a week for the bears.

I'll try to post more later on in the weekend. Have a great weekend.


Price is working within the trend channel. Is it possible minuette (v) is complete or near completion? Price fell just shy of the lower trend channel. (v) = (i) at this point as well.

Don't forget the bullish alternative count as well. We may just be working on more 1-2s.

Will have to keep an eye on the channel. If price breaks out, then I would expect more downside to follow.

Either way, there should be a bounce of some degree. The question now will be, will the bears let the bulls in to buy this?

Thursday, October 29, 2009

10/29 - SPX: 1-2s

Here's a quick chart on the SPX with the bearish alternate count. Say wave 2 is tracing out now and it wants to move higher, it appears 1075-1084 may be an appealing target range.

Wave 2 would be contained within the 61.8 - 78.6 retracement levels. Plus there is a gap that may need to be filled.

Just something to think about.

10/29 -DOW

60 min

30 min

I mentioned in a previous post that an alternate bearish count was possible. I was too focused on SPX at the time that I completely forgot to watch the Dow.

Well here is that bearish alternate count.

This would make sense since the correction today was a sharp zigzag, which is indicative of a wave 2 vs a wave 4. A 4-1 overlap would occur as well if today's retracement were to be counted as a wave 4, so it won't be. SPX technically has not violated the 4-1 rule yet.

Two things on the chart worth mentioning is that price is approaching the 61.8% retracement and nearing a backtest of the March - July low trendline.

But don't forget this chart as well. Because of this chart, I won't be surprised if the indices continue to move higher.

Though the histograms may indicate a change in trend once again, it may correspond with a sharp wave 2 correction testing the 78.6% retracement level.

I do not have one for the Dow at the moment. Suffice it to say, the Dow failed to touched the lower purple trendline like SPX did.


SPX 1-3 Channel Lines

SPX 2-4 Channel Lines

SPX MACD Histograms

I don't think today's bounce should have surprised anyone today. It was certainly expected. So far the count has been maintained. Unless 1074.31 is taken out, this is still a good count.

The first chart shows you what was expected this am with the EW trend channels. I initially drew the lines using the end of waves (i) and (iii) with a parallel one to that line to anticipate where (iv) would head. So far so good.

Price retraced 38.2% of the move from 1101 thru yesterday's low. This retracement level lined up well with the first trend channel.

Price, near the close appeared to pivot back down. So with that, I am assuming wave (iv) may be complete.

Now that wave (iv) is complete, I have drawn new EW channels to project where we may expect wave (v) to head. (The new channels are set by drawing a line connecting the beginning of wave 2 and end of 4. Take a parallel line to that and line it up with the end of wave 3.)

Typically, wave 5 should touch the mid-line or lower trend line. In this case the mid-line equals approx 1040 and the lower equals approximately 1020.

These levels would be reasonable to hit and complete minute [i] since they are key support levels. Price may then bounce off this to form minute [ii].

The caveat to all this now is the third chart. I mentioned that I would be watching the pattern with the MACD Histograms. Today put in a lower bar. MACD is beginning to turn back up as well.

Now if price continues this pattern, and if solely using this as a guide, it is indicating that price may try to make a new high somewhere near the green trendline.

Since the analysis worked like a charm for the recent slide, I don't want to underestimate this.

However, given the current count, I think I may give price one more day to play out just in case this pattern finally breaks down.

Not to sound like a broken record but I will wait to see if 1o74.31 is taken out. If so, I would guess the case for a new high may grow much stronger.

Finally, there is also one bearish alternate I'd like to mention. The fall from 1101.36 to yesterday's low (1042.18) may have been minute [i], with today's bounce the beginning of [ii].

I'm not sure though because I'm not too confident I can count 5 waves down to complete minute [i] at 1042.18. A newer high above 1101.36 or course would rule this count out.

That is all for now. I will try to post more later tonight.

10/29 - SPX AM UPDATE #2

Could minuette (iv) be tracing out a double zz? Wave 4s are usually triangles and flats but this is still possible.

It is also possible this could be another wave 2 and the previous counts from 1101 is off. Yesterday's bottom perhaps could have completed a wave 1.

We are fast approaching the upper descending trend channel. One other thing to note is that the 1065 level is also a 38.2% retracement from the 1101 high to yesterday's low.

Let's see if it pivots there.


Resiliency in the bulls or is it just a dead cat bounce after 4 days of selling?

If the count is still correct, I would expect minuette (iv) to hit the blue upper descending trendline. This looks like it is approximately 1065 or so.

Minuette (iv) could work itself into a triangle and play out the rest of today and tomorrow. If that were to happen, I could easily see it work it's way back below 1060 to complete wave e of the triangle.

Ultimately a break above 1074.31 will make this current count invalid. If this occurs, a check of the MACD histograms will have to be confirmed if there is more to go to the upside.

And of course, an end of day check of the daily MACD histograms may indicate where we go.

10/29 - SPX Pre-Market UPDATE


GDP numbers came in higher than expected. I'm no economist but wasn't there talk about an inflated number due to cash-for-clunkers and what not?

It doesn't matter to me at this point. The only thing I'll be watching to see if we continue heading lower are these two charts.

The first chart was posted on Tuesday. Price pulled back to the lower purple trendline as anticipated based on past behavior (see post on this)

Now I'll be watching to see how high the daily histogram prints after today. Yes this may be a little late for day trading today (sorry folks, not a day trader) but it may provide us with a little heads up as to where we may be heading in the next week or two. Besides, a nice trade was made from 1079 til yesterday's 1042 low.

The second chart could potentially give us an earlier heads up that the move lower over the past week is complete if price takes out 1074.31. This would result in a 4-1 overlap.

Of course that assumes the entire count since the move lower is correct. That is why I'll be keeping an eye on the daily histograms as well.

I still believe 1060 will hold to complete a minuette (iv) and at worse just shy of 1074.


Wednesday, October 28, 2009


Here's another perspective. Price turned right on the money.

10/28 - OIH Rollover?

I had to adjust the count from a previous post but I think the OIH may have completed a nice A-B-C correction from the March low.

Price completed what appears to be a very nice looking ED, with a wave 5 overthrow to boot. Price has since retraced and broken through the lower wedge line.

MACD also broke through its trend channel.

We shall see if she follows through tomorrow.

I did not include this on the weekly chart, but price has retraced 38.2% of the Jun-Mar slide.

***Disclaimer: I marked these counts without regard for proper degree labeling.

10/28 - DOW H&S and TRANS

I posted this chart two days ago. As I previously stated, this is getting way ahead but something to consider as a future market path.

So far so good. The Dow has more to go before it touches the purple trendline. Perhaps this is signaling there is more downside to come.

On another note, I'm curious if the structure we are now seeing is going to resemble the same type of structure we had from the July rally. The July rally was a never ending series of 1-2s and 3-4s. That was a difficult one to count. So far the same may be occurring here as well.

As for the trannies, they continue to lead the way down. I had to move my minute [i] label down again because I think that is what it is still working on. It's possible [i] may drop further as this may go hand-in-hand with the Dow's further slide to it's purple trendline.

I have two support lines in place with the first having been broken today. This could be a key break confirming a double top is in.

Will have to follow up with this the next few days to see if there is follow through and a backtest of that support line as resistance. The backtest could be minute [ii] before [iii] takes her back lower.

MACD crossed the centerline today as well with the selling.

10/28 - SPX and SPY



Don't you love it when a plan comes together? I posted this chart for the SPY, DOW and SPX several days ago. Click here for post.

Coincidence or not, price behaved accordingly and this turned out to be a very nice trade.

Now where do we go from here? I still believe there is more room to the downside, however, we may see a slight reversal back up tomorrow to possibly test 1060 (max) and complete a minuette (iv).

If the count on the SPX chart is correct, then further lows lay ahead. By my count, we are only in minuette (iii)(and this could possibly be at minute degree) of minute [i].

Also keep in mind, price fell right on that purple trendline. If the pattern continues as it has in the previous 3 months, we may still be setting up for a reversal back up to complete a possible minute [v] (this is an alternative bullish count BTW).

We will have to keep an eye on the MACD histograms tomorrow to see if a new lower bar forms after today's close. If so, that may indicate we have bottomed on this trendline (purple) for now and I would expect some more upside to come.

But I will say I'm leaning more towards the "a top has been put in" camp. I'm still not going to say P3 has begun, but this is surely a good start for a nice trend reversal.

The next two days will be very telling.

I removed some alternate counts I previously had after today's action. However, there still is one on the docket and with today's close we may have potentially completed minute [iv}.


A Closer Look

I just wanted to quickly point out that a possible 1-2 1-2 count is in the works. Ignore the degree markings for now but the 1-5 and A-C counts in red starting from the 1095.83 high is used to highlight the 5 wave impulse count only.

Overall i think we are working towards a Minor 1 wave down. I will provide an update later this eve. Gotta get some real work done now!

spx- 10/28 AM UPDATE v.2

60 Min

30 Min

15 Min

You know what they say, "Haste makes waste". Sorry about the previous post below. I think this is a better count at this time.

Watch that purple line!


**************UPDATE: DISREGARD THIS POST*********************
Here's an AM update. I have updated the count and it appears the 1-2 1-2 count is gaining momentum. I'd still keep an eye on that purple trendline near 1040-1045.

If this continues, a 3 of 3 is going to smash through that purple trendline.

Tuesday, October 27, 2009

SPX Histograms

I don't know why I am fixated with MACD Histograms right now but there is a pattern I noticed with SPX since July that may be worth watching. This may help indicate if the current pull back is temporary before there is a move higher.

Each time SPX pulled back as it stair-stepped higher, the histograms appeared to peak. Once a lower bar followed the peak, price reversed higher.

Simple as that. We will see...


SPX Count

SPY Count

Dow Count

Dow Line


Wow. Where to begin tonight. There is so much going on and the major indices have just enough discrepancies in their wave structures to render the count quite confusing.

Let's start off with


By my count, wave (iii) blue is in progress. We ended the day with a possible wave iv (red) triangle. If the count is correct, a thrust down to complete wave v (red) should occur in the am to complete wave (iii) blue.

Whether wave v (red) fills the gap below 1060 or truncates at this support level will have to be seen. I'm still keeping an eye on that purple trendline. That is my near term target if and when 1060 is taken out.

The Alternate count (in blue) is still in play but will be invalidated if price breaks through 1060.

Though I did not label the chart, I do believe there is still a series of 1-2s occurring as well. Colombia1 does a fine job labeling this (

Not much to add here by way of counts but just wanted to point out the two breaks in the trendlines and the ever increasing MACD histograms.

Target is still 104.


The Dow's count is similar to SPX's, however, with the bar chart, there is a clear 4-1 overlap. This is a no no by EWP rules.

The wave iv (red) appears to be forming a triangle, however, that just may not be one after all. This could either support the 1-2 1-2 count or this may just be one of those times where the rules may be violated or the count is wrong completely.

FWIW, I included the line chart, which as I have repeated in the past, sometimes helps provide some clarity. Notice with this chart, there is no 4-1 violation and the triangle pattern is quite clear?

We will know soon enough tomorrow.


Last but not least I think the Trannies is showing the most precarious situation.

Price has broken through the 50 SMA, broken through two trendlines and a MACD centerline cross is very imminent. I believe the case for a double top is growing each day.

There are too many squiggle counts at the moment, but I think the trannies may also be sporting a series of 1-2s as well. I may get around to drilling the count down tomorrow. For now, I have just labeled this decline a minute [i], which I believe has more to go.

Once again, all this appears to be indicating a possible near and intermediate term top.

Monday, October 26, 2009

SPX- 10/26: Weekly MACD Histogram Divergence

I just wanted to post this chart even though it is not EW related. The MACD Histogram bars on the SPX weekly is showing a large negative divergence with the moving average indicators.

If correctly interpreted, the Histogram bars should be indicating that a MACD cross is about to occur. In fact, the MAs are looking to cross, if not flatten out and converge on one another.

MACD MAs, like all MAs, are lagging. The histogram bars are supposed to provide a little bit of an advance indication.

Given everything else I have presented in the past week along with this potential cross, I am more certain we will see some type of pullback.

P3? Hmmm... Let's address that when it truly peeks it's head.

10/26: SPX, DOW and TRANS

SPX Daily

SPX 60 Min

Dow Daily


TRANS 60 Min

Dow 60 Daily H&S

Dow 60 Min H&S

So far it looks like the series of 1-2s are playing out. By the close, I counted minuette (iii) in progress. There appears to be a little more to go.

Be aware, I am still not focusing too much on the degrees at this point. For now that is what I am counting. My minuettes can very well be minute degree.

I still anticipate 1060 being taken out and eventually a move to 1040. The SPX daily chart has been posted again for reference.

Where the market chooses to go from there will be key.

I have included a Dow and highlighted the same things I did with SPX and SPY. One pretty important thing to note, is that the Dow has closed below the March - July Low trendline.

I have included the trannies again because I still think they hold some significance in providing a clue. If the count is correct, minute [i] completed with minute [ii] in progress.

Last but not least, I have included a Dow chart highlighting a potential Head and Shoulders pattern (This also applies for SPX but I do not have the time to chart this now). For those of you who read this blog regularly, you are all aware that I always do this.

So far I think I'm batting very poorly on this. Regardless, I still think it is worth mentioning.

On the 60 min chart, if price hits that lower purple trendline the head will be complete. A nice 61.8% retracement would form the right shoulder.

Notice that the 61.8% retracement level sits just above 9917, a level that would become resistance if price were to follow through down to the purple trendline.

SPX- 10/26 : Minute [i] LD?

This could be jumping the gun here but these are some possible alternate scenarios I see forming now. Just something to keep in mind...


Once again, I do not have access to my normal charts, so I will add on to the one I posted last week as a temporary count.

Price is behaving as expected. That wave ii (red) retraced approximately 78.6% just like wave ii (blue).

I believe this is a clear wave iii (blue) that began today as anticipated. I posted this last week.

1060 is most likely the first target (at gap support), which is where I think wave iii (blue) is headed. However, I think 1040, again as posted last week, will be where price is gunning for near term.

We will see!