Tuesday, January 19, 2010

1/19 - SPX EOD and E-Mini

Bearish Option

Near term this is my preferred count. I added a few notations and labels since the last time I posted this chart.

Before today, the structure was counting well as a contracting Ending Diagonal (I believe the DOW still counts well) with 3-3-3-3-3 subwaves. However last week's low and what I had considered a trend break has skewed the contracting ED pattern a little bit.

EWP is not completely clear if a diagonal may be a parallel structure. More common EDs contract and look like wedges.

The structure now does not quite wedge but channels well, which one may interpret as a typical impulse.

The impulsive wave today looks like it is almost complete. This would be considered a minuette (a) in a final (a)-(b)-(c) for minute [v] if the entire structure still counts as a contracting ED.

However, I do want to give some leeway to this count if I am off since the sideways action from 11/16-12/9 was a mess. So having said that, minute [v] may develop into an impulse (5 waves) vs the a-b-c pattern I am expecting.

Bottom line, I think wave [iii] and [iv] have been identified. A final fifth is expected. Wave [v] is expected to hit the target zone as highlighted, whether it does so in an a-b-c fashion or in a 5 wave fashion.

One other thing of note, I have highlighted the length of wave [iii] in orange (notice how it barely sits above the .618 ratio line?). Wave [v] can't stretch past this level or it will make wave [iii] the shortest. This would be a rule violation.

Now, it price decided to turn lower and fake us out, a break below 1130 would increase the odds that a top was in place.

The last chart is a bearish count for E-mini. Hey I had to put one in here.


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