Friday, February 5, 2010

2/5/10 - SPX EOD [10:30 PM PST UPDATE]

Update Primary with Alternate Counts

I was questioned the move for wave Alt:a (red) today. I commented on this in the Circle Community Lounge at 10:38 am. I called the structure an expanded flat.

At the time the structure was not complete but I suspected it may be forming a flat. The problems with this count though is that wave a counts too much as a 5 wave structure, wave b is well beyond the typical Fib relationship to a in an expanded flat.

However, it still is a good possibility so that is why I am using it as an alternate count.

So that was a pretty exciting day today. I think this chart shows a pretty clear five wave move down to complete what I believe to be minuette (i) of minute [iii]. The waves, after all was said and done, channeled well using the 2-4 line.

A clear break of that channel occurred, which signaled a wave (ii) of [iii] was in progress. There are 5 clear waves on the bounce as well. The question now is was that wave a or i?.

If it is wave a, it is most likely done. Wave b should be on tap come Monday. I have placed a green box on the chart indicating the target zone for the ensuing waves.

Each box represents a Fibonacci retracement level and relationship to each wave. For example, the zone for b includes the 38.2-61.8% retracement level as well as a 123.6% retracement level. If b retraces 123.6%, this corrective structure would be considered an expanded flat.

The zone for ii or c was projected from a wave b retracement of 50% and a relationship to wave a of .618 to 1.0. If c = a, it would come just under the 1085.16 gap resistance above. This could be a target for the bulls.

1085.16 is also a 61.8% retracement from the 1104.73 top to 1044.50 bottom today.

We will just have to see what the early part of next week brings. If this count is correct, it will probably end pretty bloody.


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