Wednesday, October 27, 2010

10/27/10 EOD UPDATE

EOD UPDATE

SPX - 60 MIN PREFERRED

As suspected in this morning's post at 6:38 AM, the triangle option was pushed into the spotlight. The selling that occurred pushed the trendlines of the ED apart to the point where I no longer believe it to be an ED. (Granted there is one other issue with the count to begin with as seen in the comments section of my post earlier today.)

Irregardless of the ED count, the triangle was the backup count I was watchingbecause of the overlapping nature of the waves so I was still confident the selling would be contained and if it weren't then both options would've been off the table. I pondered this option last Saturday here.

So where do we head from here? Subwaves in triangles typically retrace 61-81%. Given that level of retracement, wave [D] can travel as high as 1186-1191 before subwave [E] kicks in lower. The target for this triangle thrust, should one come, is approximately 1228.

So what invalidates this count? Pretty simple.

The market should not drop below what I have labeled as wave [C]. If it does, it was not a triangle.

Should the market rally above wave [B], the triangle will be out and the correction would be considered a running flat wave (iv).

Notice the hourly MACD is minutes away from a buy signal cross up.

Gotta run for now. I'll get some more charts up later tonight.
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