Wednesday, May 5, 2010

5/5/10 - SPX EOD



It's been a long day for me and this is a late post so I'm going to try and keep it short.

I still do not believe it is very clear where we are with the structure after the past two days of selling. There are valid arguments for both camps that still exist. I, however, still lean towards the bull camp on the count since I'm counting with the daily trend.

For the bears, at the moment, we are looking at only 3 waves down, of which the 3rd wave is clearly sub-dividing into 5 waves or has sub-divided into 5 waves.

From a bull argument, the pullback may be counted as an a-b-c structure, i.e. 5 down, 3 up, 5 down.  Not much as changed from my 60 min count above.

I show wave (c) near completion or as completed today. Currently wave (c) is 2.00*(a)  which is a nice Fibonacci relationship. Should (c) require more time and follow through, I would look to a 2.618*(a) relationship somewhere near the vicinity of 1145 (1150).

Alphahorn reminded me yesterday of a guideline from Elliott Wave Principle, pg 66, " The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave on one lesser degree, most commonly near the level of its terminus." 

On the 60 min chart above, I have a red line that represents the terminus of wave 4 of one lesser degree. That terminus resides 1165.77. Today, the market has followed through to this level and closed just about dead even with it, 1165.87 to be exact.  Wow, that's one 10th of a point.

So if this guideline where correctly applied here, it may be inferring that the correction since the 1213 top has been a wave 4 correction down, which is an alternate count I have had for sometime. I'm still calling this a Minor B but either way both imply the same thing, higher prices to come in a 5-wave structure whether it be via minute [5] or Minor C. 

A confirmation that this pullback is complete will come if the market can rally over 1181.62, which represents the bottom of wave 1 of the bear count. Since we know wave 4s cannot retrace back into wave 1, this will help confirm that the pullback was not an impulse wave to begin with. 

On my SPX trendline chart above, I point out a couple spinning top candlesticks that were located at the bottom of a few pullbacks over the past year and a half. Of those spinning tops, a rally to new highs followed. 

Per, "After a long decline or long black candlestick, a spinning top indicates weakness among the bears and a potential change or interruption in trend."

I was hoping to get a 5 min chart out but I am pooped. I may try to scribble one out in the am so check back later. 


  1. i predict spx rally hard Thursday toward 1185.
    for the next 3 days - top post:

  2. Nice stuff as always Grand. Thanks!

  3. humble and highrev,

    ur comments are much appreciated as always.