Thursday, December 31, 2009

12/31 - SPX : A Long Term View (and the case for a reversal)



Maybe this chart may provide some perspective. One cannot ignore the convergence of three things on the chart:

1. 1130 price high on SPX
2. The long term bear trendline
3. A support/resistance line over the past 12 years

I think this alone may indicate the end is here or near.

I think the majority of EW analysts (including myself but I am considering other counts) has treated the bear market rally as a Primary wave 2 of cycle wave C. There are other folks out there who believe this could be the beginning of a new secular bull market and are labeling the rally as Primary wave 1.

At this point in time, I don't think it really matters what camp you fall in because
with either option, a substantial pullback would be on tap if the top is in.

The bears are expecting the beginning of Primary wave 3. In this scenario, a pullback below the March lows in anticipated.

The bulls would expect a Primary wave 2 pullback (which in itself could be substantial enough to retest the March lows). The following would be expected P2 levels based on Fibonacci retracement levels:

38.2%: 950
50%: 897
61.8%: 850

We will see soon enough.

12/31 - DOW : EOD Count and H&S



Remember this count from earlier this morning?





Lookie where she went.


The last bullish option


It's nice to see a H&S pattern I call play out for once. My gut tells me we have topped but until I see 10263.97 get taken on the DOW, there is still a possible bullish count that remains. Granted this last bullish count assumes we only have one final wave five move higher and then she comes crashing down.

For this bullish count, wave [iv] may not quite be completed yet. There still is room to head lower.

So my guess starting next year is we head lower to complete [iv] and possibly rally to complete [v].

But again, my gut tells me we may have topped so I won't be surprised either if the trend has changed and we head much lower. I'll post a bearish count later.

HAPPY NEW YEAR to all!

12/31 - DOW H&S



How this figures into the overall count I'm still not sure. One way I'm looking at this, if the top is not in, is that a larger ED is playing out.

This would have to be the case if the H&S target is met because a 4-1 overlap will occur.

And of course the other option is that the top is in.

12/31 - TRANNIE TOP?






Is it possible this count is legitimate? The final wave (c) of Z is almost a near perfect Fib 1.618 x (a) of Z. The count looks pretty clean.

However, I think price needs to break 4059.91 to confirm that the move down is not just another wave 4. If it does break this level, I think there is a more compelling argument that a top is in.

The alternate count is labeled so we'll just have to see.

Tuesday, December 29, 2009

Monday, December 28, 2009

12/28 - SPX AM Update

[9:10 AM UPDATE] I forgot to include the long term bear trendline on the chart. It looks like we are there now and the daily candle is looking to setup a shooting star. Looks a little toppy here....




Remember this chart? Here's my previous post. Just something to keep an eye on.

I made a few slight changes so you can see where price is at relative to all the trendlines. By the looks of it we are close to some type of top.

I probably won't be back until the new year so good luck to all and Happy New Year!!!

Wednesday, December 23, 2009

12/23 - Mini AM Update


She bounced off that upper trendline on the money. Let's see how far she retraces.

Tuesday, December 22, 2009

12/22 - TRAN






Dan has a great post tonight on the Trannies. I wanted to take another approach to this which would arrive roughly at the same spot as Dan.

I have labeled the Trannies as a triple zigzag. If this is correct, the final wave C ended with an ending diagonal and a wave 5 throw-over. One issue I do have with this count is that the sub-waves for the ED may not necessarily count as 3-waves (a-b-c). I have not spent the time to drill down the micro count for this.

I just like the way price respected the wedge for subwaves 1-4 and wave 5 ending in a throw-over. So just based on "looks", it looked right.

Notice the Fibonacci relationship of wave (c) of Y to (a) of Y. It is nearly 1.618 x (a).

I guess we'll see here shortly.

12/22 - ES Mini





This has been the count I have been following for the Mini. So far price continues to fill the wedge/Ending diagonal.

I like how Minor A of (Y) channels perfectly. As for Minor C of (Y), Intermediate 4 could be moved over to where I have it labeled as b (red) of 5, but I will leave it there for now unless a ghange is required.

By this count, we are very close. Either it is completing the final wave c of 5 of Minor C to complete it all or it is just wave a of 5 of Minor C.

As I said in the previous posts watch those converging trendlines. A thrust out of the lines should correspond with the tightening Bollinger Bands on the daily chart for SPX.

Monday, December 21, 2009

12/21 - DOW





Looks like this SPX count is out.

However, the DOW still shows a potential bearish count. Until 10516.64 gets taken out, this may be worth watching.

Saturday, December 19, 2009

12/18 - SPX


Just wanted to add a little more to this chart.

For early next week, I am looking for a little more to the upside to complete either wave (ii) or (i). I have highlighted a target range for this move.

Either price fills the gap above or what appears to be an inverted head and shoulders takes price higher. Both targets fills a typical Fibonacci retracement level.

Correction: My post on the weekly MACD shows a cross. However, at the end of the day, the chart shows that it has not crossed but it is very close.

Friday, December 18, 2009

12/18 - SPX WEEKLY MACD REVISITED




Remember this chart? I was tracking the weekly MACD crosses and the associated movement of price as a result of the crosses. I think a red close today will solidify this latest cross.

If past behavior is indicative of future behavior, then maybe we will see that average 4.4% correction coming in the next few weeks.

12/18 - SPX AM UPDATE


This is how I'm counting this move down so far. I think the five wave impulse down stops at the Jul-Nov trendline support. A wave 2 retraces back towards the gap above, which makes for a nice 50-61.8% retracement.

If we break that trendline, then this could be a third wave down, with wave 2 where I have blue iv.

Thursday, December 17, 2009

12/17 - ES Mini AM Update [EDIT 9:35 AM]

She broke thru that lower converging trendline again. It's looking pretty bearish...



Bigger Picture



I don't think it was an ED after all. However, the final 5th channeled perfectly.

They are battling it out on the lower converging trendline. Will be keeping an eye on the retrace (if there is one). I expect some type of retrace since the move down counts perfectly as 5 waves down.

The question now is: Is my preferred count in play or is this just a wave 1 down of 5 more to come.

Wednesday, December 16, 2009

12/16 - ES Mini 10:30PM (PST) Update

[12/17 6:05 AM (PST) Update]




So far she's moving as expected. I see a potential ending diagonal for subminuette c of minuette (b). This will make a pretty clean 61.8% retracement.

The other alternative I forgot to mention last night is that this correction could be of the wave 2 type. In the end, either counts takes price higher.

However, I can't help but stress that the converging trendlines are important to watch.

A break below will change things and that would confirm with greater certainty that 1119 (SPX) was the top.

[10:30 PM PST UPDATE]:




Looks like she hit the 38.2% mark. Would that be it to complete subminuette c of minuette (b)?







The top chart was posted earlier this evening just after the close. The second chart was as of 9:00 PM (PST).

Looks like some progress has been made for subminuette c. Let's see what we get in the AM...

12/16 - SPX Long Term

20 Year


5 Year


60 Days


If the SPX wants to continue to push higher and if the longer term chart is any indication, I have a feeling 1140ish will provide a serious level of resistance.

Since 1998, the 1040 level has acted a support and resistance area numerous times. As we focus closer on the past 60 days, notice that the 1040 trendline, long term bear trendline and converging trendlines all intersect near this level.

So again, IF the SPX pushes higher, I'll be watching the action at this level.

12/16 - ES Mini Update



Not much to add from yesterday's post. Looks like subminuette wave b completed and subminuette c began when price reversed midway through the day. I will be keeping an eye on those Fib targets and if anything an eye on the converging trendlines.

The Bollinger Bands are still tightening so a move is still in the works.

Tuesday, December 15, 2009

12/15 - ES Mini : Ascending Triangle or Ending Diagonal?






It's pretty obvious a wedging pattern is emerging. The question is are we seeing an Ascending Triangle (which is a continuation pattern) or an Ending Diagonal (which is considered a topping pattern).

The former would result in higher prices and the later in a pullback.

I present a double zigzag (W-X-Y) count for the minis. This is just one option of many options out there but I think I like this as my preferred at this time. The final Minor wave C of Intermediate (Y) is forming an ending diagonal.

A closer look (second chart) shows that minute wave 5 of the triangle is in progress. Fib targets are presented for minuette wave (b) somewhere between 1105-1097 before a final minuette wave (c) shoots to the upper converging trendline to complete this whole mess.

Be aware that if this count is correct, a wave 5 throw-over may result in price penetrating the upper converging trendline only to pull back substantially.

I forgot to add the Bollinger Bands, but they are tightening on the daily chart. This should be further evidence that a large move is coming. I think we will know shortly where we are headed regardless of the counts. Just keep an eye on the converging trendlines. She's gonna break one way or the other.

Thursday, December 10, 2009

12/10 - EOD



Ok. Towards the close today we saw a lot of sideways action that appeared to look like a triangle. I initially felt it was a wave 4 triangle of a 5 wave impulse off the 1085.89 low but I now do not believe it is so.

What would be considered wave 1 (start 1085.89), labeled (w) in green on my chart, does not count well as a five wave structure. It counts better as a double zigzag. Therefore it cannot be counted as a wave 1.

On this chart I present 3 options:

1. A whole bunch of nested 1-2s with a wave 3 due tomorrow heading lower. (Note: I do not present the Leading Diagonal count because I think this count is very similar. If the LD 1 down is legitimate, I would expect this retrace up to go no higher than 1112 before heading back down)

2. Alt: The move down from 1119.13 counted as an a-b-c to complete Minor 4. If so, I would expect prices to move higher to complete 5 somewhere near here.

3. Alt2: We are still working on the expanding diagonal with wave (e) remaining to complete. According to my alternative count, (e) is forming a double zigzag.

GL!

Wednesday, December 9, 2009

12/9 - SPX : A Bullish Option


Here's an update of this chart I have posted for the past few days. One could argue that wave (e) is done or near completion. More likely near completion because wave (e) would have to extend beyond (c) and it hasn't done it yet.

What is interesting to point out here is that the Bollinger Bands are tightening up. Today's low was 1085.89, just 6/100th of a point shy of the lower Bollinger Band. Did we find buyers at this end and will that bring upon a thrust higher?

Price also respected the purple trendline, which has guided price with each daily MACD crossing.

Having said all this, my primary count is still the one from the previous post. The Daily MACD is making it's way towards the centerline and price closed under its 20 day ma.

I think we should have an answer before this week is over whether there is one last push higher or the trend has definitely changed to the downside.

12/9 - EOD


Ok. Some slight adjustments had to be made since the previous count resulted in a 4-1 wave violation.

My primary count at this point is a nested 1-2 wave count. [(i)blue and (ii) blue, i black and ii black on the chart]

I am expecting wave ii black to top either near 1098 (50% retracement) or 1101 (61.8%) before a wave 3 takes us lower towards 1060 (This target relies on the weekly MACD crossing, which is very close).

Other folks have the move down from 1119 as a Leading Diagonal. I did not label this but wave iv of the LD would replace my wave ii black. That would leave a wave v down to come that would probably hit 1080. I think this count is pretty valid as well since it correlates well with the daily MACD analysis I have been doing.

If the LD plays, watch out for the sharp reversal higher once it completes.

The other alternative is the expanding diagonal I have been talking about. Wave (e) of that structure has not completed yet if this is a legitimate count. That would take price towards 1070 or so.

So I'm still expecting a move lower but will be keeping an eye on what price does at 1080 and 1070.

Who Says EW Is Worthless?

9:55 AM (PST) UPDATE:

Or wave iv could be a flat in progress.


12/7/09


12/9/09


By all means EW is not the end all be all analytical tool but here is just one example of EW's usefulness.

I posted the top chart on 12/7. At the time I was expecting an a-b-c corrective to complete either a wave (b) or (ii), with a wave (c) or iii to follow.

Aside from shifting a few labels around, the overall pattern played out as anticipated. Now the question becomes, is this only an (a)-(b)-(c) correction or a new 5 wave impulse down (iii) completed thus far?

Note that the blue line represents the Jul-Nov trendline. As of this posting, it pivoted right at this mark.

A break below would make the case stronger for a 5 wave impulse down. I guess we'll see if it gets broken or bounces higher from here.

Tuesday, December 8, 2009

12/8 - Market Update : SPX, OIH and RUT

SPX Weekly


SPX Weekly Closeup


OIH


OIH H&S


RUT


Let's revisit the weekly SPX chart. I have presented this over several weeks now.

MACD is on the verge of crossing below it's signal line. If correct, it is possible a 4% or so correction may be anticipated once the cross occurs.

Taking an average of 1100, a 4% correction takes us towards 1060 or so. Of course this assumes price behaves the same way as it has in the past six crosses.

If this occurs, 1060 would result in a break of several trendlines and should be considered very bearish.

I believe the OIH is also in the mist of a larger correction. So far, price is confirming a completion of the wedge (Ending Diagonal) I highlighted on this post.

The last MACD cross (weekly) resulted in the large sell off. We have a cross once again and it is occurring after what counts as a nice zigzag. Whether the zigzag counts as a wave 2 or b, one should expect a wave 3 or c to take prices back near 60 or so.

Additionally, I believe a Head and Shoulders pattern is in the works. 110.46 would be the key neckline break. It is interesting that price touched this level exactly back on 10/2. If the H&S plays out, a move to 88 would be expected.

So given the MACD cross, a good looking zigzag, an ending diagonal (wave c) and a potential H&S in the works, I say chances are pretty good that the OIH is looking to pullback significantly.

As for the RUT. Could we have seen the completion of minute [ii] today? I adjusted the trendlines for the wedge. MACD 60 min shows a steep angled drop towards the center line is approaching.

Will have to see what price does tomorrow.

Monday, December 7, 2009

12/7 - Dow and RUT








Here's my take on the Dow.

Price has broken out of the red channel and is now respecting the lower trendline. On 12/4 the Dow hit an intraday high of 10516.70, approximately 200 points over the 50% retracement of the decline since October 2007.

As for the RUT, I made a slight adjustment to the labels. I have subminuette iv completing today with subminuette v on tap to complete the Ending Diagonal for minuette (c).

12/7 - SPX PM Update



Remember this post? I added Bollinger Bands to the chart and I like how the lower band also collides with the other trendlines near 1080.

In addition to that, the bands are tightening, indicating a large move is about to occur. I would expect that would be down to 1080.

As for the count, I still think this may be a valid count (I consider it an alternate), but more importantly, I believe in the near term we will see 1085 before any new highs are made, if they are made...