Friday, April 30, 2010

4/30/10 - SPX EOD

SPX - 60 MIN

SPX - 5 MIN 






Sell in May? The market must have read my post last night. We almost had a 2% down day and approaching the 1181.62 level I am keeping an eye on to support my rectangle pattern.

As for the market action today, most of the options I have presented are still on the table. I had hoped that we would have resolved most of them today, but we did not. So I would still consider this a non-event.

The market appears to be chugging along  in a sideways fashion supported by key MA levels. I still like my rectangle option right now among others. As mentioned above, I'm watching the 1181.62 and 1175.12 level. If we breach those levels, I will be paying particular attention to my Reverse Fibonacci chart for targets to the downside. At the moment 1170 and 1160 look like potential areas.

It should be noted that a potential head and shoulders formation is also developing. The neckline falls in line with my 1181 level. Should this pattern follow through,  1140 appears to be a target.

As far as bearish counts are concerned, all I have at the moment are 3 waves down from 1219.68. If the bear case is to truly take hold, a larger wave 3 should unfold shortly. This wave 3 down may target that 1140 area. That would place wave 3 at 1.618* 1.

Take a look at the Daily SMA chart.  The 50 day looks like a good target at 1165 if we lose the 34 or a 38% retracement of Minor A takes us to 1150.

As for a major top? Until I see 5 waves down of minute degree and when the daily MAs cross I will not accept that a top is in. Perhaps if the market breaks the ascending trendline on the 60 minute EMA or weekly wedge chart and there is a MA cross-over, maybe it will get my attention.

Don't get me wrong, we are probably very close but until the evidence presents itself, why call it the top?

Will be looking forward to next week.

**Note: The 5 min chart has some bars which appear to be skewed. It must be a glitch with my charting software. When it is corrected, I'll post a corrected version***

Thursday, April 29, 2010

4/29/10 - SPX EOD


Yesterday was another good example of using EW, among many tools (Fibonacci, EMAs, gaps, resistance levels and etc) to pick a trade to go long on the pullback with a clearly defined stop level (1181.68). Though there are several bull and bear counts out there, the trade setup was for a high probability bounce towards 1205. So far so good. 

Currently it looks like we found good support at the 34 EMA. We closed back over the 21 EMA and also managed to close over the 61.8% retracement of Monday's decline at 1205. Not only did it close above this level but it also appears to be providing support at the moment.

I don't have access to my usual charts at the moment so I'll post them later tonight. There's really no new developments. Several of the options are still on the table as well.

It does appear that this leg off 1181 is near an end since the structure looks like 5 waves up is complete or nearly complete along with the 30 min macd signaling a possible pullback.

Based on my counts, the structure from 1181 .68 may be (degrees may be off):

1. Wave a of minute [x] of Minor B : expecting a b wave next
2. Wave 1 of minute [v] : expecting a wave 2 down next
3. Wave ii of (c) of Minor B : expecting a wave iii down next

An end to this structure up still satisfies all three of the above options and since the 30 min macd is indicating a turn is near. A break of 1181.68 tomorrow will void option #2 above but would still provide for a valid count for #1 and #2.

Should 1181.68 break, that 1170 level I highlighted a few nights ago most likely may come into play. Will see what happens. Gonna need another 2% down day first to begin to address option #3 in earnest.

Ok. Gotta run for now. I'll post charts later tonight with the updated counts and possibly other ideas as to what may be developing.

4/29/10 - SPX AM Update

Wednesday, April 28, 2010






Here's a quick update of the 60 minute chart. I'll try to provide a 5 minute chart and update later tonight?

The 34 day EMA held again.

For the chart updated at 10:10 PM, I just wanted to highlight a rectangle pattern that may be playing out again. We saw a similar one back in Nov/Dec 2009 that led to new highs. Of course we also saw a smaller one in Jan of this year which lead to a decent sized pullback.

I have a couple options on the chart for what I believe to be Minor B.

1. Minor B is complete as an expanded flat

2. A double three is playing out so we may see more sideways correctives. Currently price has retraced Minor A by 23.6%, which is the bare minimum. However, what it lacks in size it may make up in time by going sideways.  This would fit perfectly with building a larger rectangle pattern.

3. Minor B is a much larger expanded flat with a target near 1170.

4/28/10 - SPX AM Update

Or a possible wave [4] triangle in the works...

Tuesday, April 27, 2010


Check out the channel. I labeled the price levels that the market would hit if it were to immediately drop to the corresponding lower trendline tomorrow.  That won't happen so as time progresses, those levels will obviously rise. The chart is below.


There is a large Fibonacci cluster at 1170. Hmmm....





Updated 2:30 PM

Updated 4:40 PM

Updated 9:48 PM

 I think it's safe to say we have hit a top of Minor degree. Based on my preferred count that would be a top of Minor A. There is still a possibility it is Minor C of "the top" but I won't go there just yet

I'm happy we finally found some resolution on the direction here. It allowed me to eliminate the triangle and ending diagonal options that were on the table. I was getting tired of trying to keep up with all the counts.

The 60 min chart shows what I have us in at the moment. So far the move down may count as 5 completed waves. I'll try to post some 5 min charts later detailing this count.

I have the structure from 1213.90 labeled as an expanded flat in minuette degree. It is possible it may be of minute degree. The green Fibs on the 60 minute highlight where (c)/[c] may target. I'm showing a range between 1150-1170. This would also fit within a 38% retracement of Minor A

The bottom two charts supplement the thesis that we have hit a minor degree top.  Whether or not it is pure coincidence I like the fact that the reverse Fibonacci technique provided yet another indicator that a turn was imminent. 

The trendline chart shows that the purple trendline finally gave in. The 50 day EMA sits near 1166, again a possibly good target for (c) / [a] of Minor B.  For those wondering, the 50 day SMA sits at 1159.

Keep in mind on the 60 min chart, I still have a gray labeled alternate. Replace Minor A with minute [iii] and the current pattern as minute [iv] instead of Minor B.


4/27/10 - SPX Mid-day Update

Looks like my triangle option from yesterday is out and the Ending Diagonal is on the rocks.

My preferred count (which is why it was my preferred!) is panning out. Now I have added another potential triangle option to watch out for though. So let's keep an eye on this structure. If she moves sideways, keep the tri in mind.


Monday, April 26, 2010

4/26/10 - DOW Long Term

Just something to think about...

4/26/10 - SPX EOD [9:50 PM PST E-MINI UPDATE]


Here's a look at the Mini that supports my current preferred count. The ending diagonal that followed the triangle on the mini is a valid one. 

What is developing now is still up for interpretation and is represented by the three charts at the bottom of this post.

I forgot about my triangle option, which is still valid. I added the chart below to keep all three options today.


So far that reverse Fibonacci chart from Friday may have been useful so let's keep going with it. The above chart applies the same technique looking for a confluence on the way back down if we hit a top today.

I used different segments of the structure for the swings. Refer to the legend on the chart for possible targets. 



Looks like a slow day in the market today. Perhaps my reverse Fibonacci chart is panning out afterall. 

But I won't get too excited just quite yet. If the turn proves to be correct, which I believe after today may be confirming, it only matches up with my current 60 minute preferred chart at the top. 

I like these two charts the best at the moment. 

I show that count working on a Minor B wave down. If it proves correct, a challenge of the 1150 area may be in the works. This would correspond with a Minor B wave retracement of 38.2% of Minor A. 
There are some alternates on the top chart as well. I still question whether this may still be part of a minute [iv] developing (whether via a flat formation or possible new triangle). We'll have to see. If we see continued sideways action, start thinking triangle again.

The second chart above is the Ending Diagonal option. Subminuette iii of the ED completed and we are working on iv now. 

It appears there was a 60 minute macd sell signal today (see 2nd chart) along with negative divergence. This is consistent so far with a pullback for iv. I'll keeping an eye on the lower ED trendline as well as the lower MACD trendline. Both may provide support for subminuette iv. 


Sunday, April 25, 2010

4/24/10 - SPX E-mini Update

Here is a count on the mini. It is consistent with my preferred 60 minute count found in the link near the top of the blog.

It appears that minuette (b) of minute [a] or [i] of minor B is completing. The degrees may need to change but we can address that later as the structure develops.

If anything, these are very overlapping waves. The ending diagonal option is on the table as well. Let's see if the those Fibonacci techniques work out and if they do, let's see if those MAs provide some support if we get a pullback this week.


[9:05PM Update]

Here's a chart using the Simple Moving Average. A nice 38% retrace from the current level will target approximately the 50 day SMA.
This is a long post. I hope one takes the time to read through it though.

I realize I have used reverse Fibonacci techniques previously but did not realize it at first. Unfortunately, not all projections panned out. See here for previous posts.

So given that, I would not give yesterday's post, "REVERSE FIBONACCI, FIBONACCI EXTENSION & LONG TERM RESISTANCE " too much credence. As I said in that post there are no guarantees but certainly something to be mindful of.

I like what Kenny is doing now. He is challenging and questioning where we are and is going back to the basics. I agree with him completely.

For those who follow Daneric, there was once a poster named Wags who had much to share (and it was quite simple) . I believe Wags' message was the most useful thing for novices (trade the trend and watch the moving averages) out there but the method in which he delivered his message fell on deaf ears.

The two charts above somewhat highlights what good ole Wags (if ur still out there Wags, correct me if I'm wrong) was talking about. Many who disputed him claimed that trend trading was too slow because of the lagging nature of the indicator. I say so what?  The two charts above should  be reason enough to believe that one could have made a good chunk of change trading/investing the MAs.

I like counting waves period. There is something about the principle and Fibonacci that intrigues me. I think it is useful and I do believe you can trade with it. (See previous posts on this). However, I am not saying it is an end-all-be-all tool, but yet another tool on the tool belt.

With the charts above though I placed some comments (especially the second chart) where I have learned that perhaps trading and counting corrective waves should take a back seat to the moving averages.

Trade the trend and if challenged with a questionable wave count, give more weight to a count that goes with the trend. In my posts, "A Road To SPX 1228", I began to post on this. I believe it was the weekly MACD bull cross that first caught my eye on this potential among other reasons.

Many will say these EW bloggers are capitulating as we start to turn more bullish. I won't say that is what I truly believe at the moment, but I have to at least address this issue and share some lessons from the past.

I still find that many folks are bearish and I don't know if it is just cheerleading a short position or hoping for something they believe to be right but I see the heavy emotion in the chat rooms. Some appear to be trapped in their positions and I don't know if that is what is preventing them from seeing something that is and has been obvious for sometime now. (Unfortunately I believe that is a product of not having a proper risk management strategy and stop-loss exit point).

I am not short/caught in a short position at the moment but I do blame myself for not heeding what I'm posting about much sooner. Hey, live and learn.

I believe Pug, of PUG Stock Market Analysis  , was the only person (at least the only person I was aware of in the EW community) who went bullish early on. Heck, when Pug was pushing his bullish counts and to see many ridicule him, that should've been a contrarian indicator. Kudos to you Pug!

You can call this post a bearish capitualtion but the trend still says up. Let's face it we can't predict the future, let alone find the tops or bottoms. The only that is good for is our egos and nothing more.

Do I still believe we may see a pullback in store? Absolutely, but I'm not quite sure it will be "the one" everyone has been waiting for.

I have posted a few times and commented in the chat rooms that I'm still waiting for a minute degree impulse wave down along with the associated moving average cross-overs to believe that a much larger turn is coming.

Until then, watch out for the dip buyers.

Friday, April 23, 2010


I apologize for the bottom chart below. There was a mis-label but I have since corrected that with the top chart above. In fact, I added a few more labels, comments and markings. I also renamed the title.

I forgot to mention that the reverse technique is new to me. However, I have used the Fib extension technique frequently.  The two Fibonacci techniques are very interesting.

Notice that on the top chart, I added a second reverse Fib technique near the top of the structure. I find it very interesting that wave b-C is currently at 161.8% of the previous swing wave a-b. Additionally there is a heavy confluence with the other reverse technique using wave A-B at 200% in addition with the 62.8% retracement of the entire bear decline to date.

What is also interesting to note are the various support and resistance levels (arrows point the way) provided by the various Fib levels. I find this whole Fibonacci concept so intriguing (obviously along with EW).

So assuming we hit a top today, I have attempted to identify some potential levels if we begin to pullback the first thing next week. The bottom chart highlights the Fib levels.

Once again, the Fib levels have an uncanny way of highlighting the support and resistance levels. Notice where 200% takes you?

Does all this mean anything? No guarantees but certainly something to be mindful of. This may help spot the pivot points.  If we have topped for now, I will be very interested in seeing where it finds support.


The SPX is coming upon a level of numerous significance

1. The "Lehman" Level
2. 62% Fib retracement (1228) of the entire bear market decline
3. Long term (20 years) resistance levels at approx 1230-1235

The top chart highlights the long term resistance level and trendlines.

The second chart is just a play on a reverse Fibonacci technique illustrated by Jeffrey Kennedy of Elliott Wave International.  I posted on this technique here. When projecting price targets with this technique, Kennedy likes to use the 1.382 and 2.00 multiples of previous swings to project for the following wave. In our example, price has achieved the 2.00 multiple of the previous swing. E.g. Wave (B-C) = 2.00*wave (A-B).

The chart also highlights a Fibonacci relationship between waves that may bear some significance due the confluence at today's level. In this example, wave (B-C) = ~ 261.8*wave (O-A)

*Note, I realized I labeled the ratio as 1.618 vs 2.618 on the chart. I'll have that corrected when I get a chance. 

Does this mean the market cannot go higher? Certainly not. It just may imply that we may see a break in this historic rise since March 2009.

4/23/10 - SPX EOD



On the top chart, the market pierced that upper trendline. The trend remains up.

I previously posted a 60 min chart but thought I would place my daily count here. Trying to keep this as simple as possible. I think the bottom line we are either searching for Minor C of (Z) or Minor A of (Z). Notice the gray labels correlate with a Minor A top.

How we will arrive there I will present with counts for the following: the triangle, expanding ending diagonal and ending diagonal count that I have presented over the past few days.

Check back later this weekend.

4/23/10 - SPX AM Update : Text Book Elliott Wave?

This 3 minute chart may depict a textbook Elliott Wave in action here.  A follow thru on that head and shoulders pattern would be nice to see. This chart ties into the triangle chart posted yesterday.

Let's check back later and see what we get.