Monday, April 19, 2010

4/19/10 - SPX EOD




It's good to be back. I'm glad I didn't miss much other than a possible intermediate term top.

At the moment, my preferred count shows this as a top for Intermediate (Z), though I'm not fully convinced this is the case. I would feel more confident should price drop below the lower ascending trendline (daily chart) and more so if 1044.50 is taken out.That is a long way from now though.

My alternate count has this as the top of Minor A of (Z) and we are working on Minor B down now. The second alternate has this as only the top for minute [iii].

I believe there are some problems in how we arrived at this intermediate top. The ending diagonal scenario was one many EW bloggers were looking for. Some still call it a legitimate formation, however, the problem here is that minuette (v) is longer than (iii), which is a rule violation per EW.

However, given the difficulties of this structure, we may have to accept this as an exception to the rule at the moment. Hopefully as the structure develops, we may gain some addtional insight.

So working from the 1213.68 top (***orthodox top), my 15 minute chart should highlight some potential counts. Notice the potential head and shoulders pattern in pink and the inverted head and shoulders pattern in red.

Now having said all that, there is one thing that I want to mention regarding the alternate minute [iii] top scenario. Alphahorn posted a very nice alternate count the other night that may help explain the 3-wave substructures that we have seen since the triangle breakout.

My chart below may corroborate this count and if not it may indicate that  minute [iv] was yet to be completed.


Notice how price has respected the purple trendline and the 21 day exponential moving average, which I posted here the other week.

Today's price action resulted in a possible reversal hammer. The last time that happened, we saw a follow thru on a reversal to new highs. So tomorrow will be key to see if there is a confirmation of the reveral.

So the bears have their work cut out from themselves. The trend still remains up and price will have to cut through several levels before we can say a longer term top is in.

*** I'm calling 1213.68 an orthodox top because it is very clear that a 5 wave impulse up can be counted from the 4/15 low. It appears to be a truncated 5th.



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