Thursday, October 7, 2010

10/7/10 - 6:57 PM EOD Update

6:57 PM EOD Update
6:57 PM EOD 1 Min

This count above leans towards a bearish case, granted it also fits in with the subwave 4 of the ending diagonal is still in progress.

The labels work and do not violate any EW rules. The proposed wave 2 retraced 62% so everything fits.

If viewed on a higher timeframe, the move off today's high at 1163.87 looks more like a three wave structure. But breaking it down, this count above looks pretty good to me.

So we are left questioning what we have. There are three options the way I see it.

1. By the close we were working on wave 5 up to complete this entire impulse up.
2. We are working on the c leg of subwave 4 of the ending diagonal as highlighted on the 1:05 PM EOD update.
3. Today's high was it for the impulse and we are now pulling back deeper beyond 1150.

We will obviously know tomorrow where we are heading. Just keep an eye on the converging trendlines.

I'm still leaning towards the 3 min chart from the 1:05 PM EOD update but we must be mindful of this potential count above and watch the support and resistance levels.

3:10 PM EOD Update

The more I study this chart, the more I find similiar patterns/behavior which is occurring. So not only do I show three similar 'V' shaped bottoms with subsequent breakouts, I also noticed that once they broke above their horizontal resistance levels, they broke through the longer term descending trendlines (red, green and yellow).

After the market broke through the yellow (not a full one) and green trendlines, notice backtest found support on those previously broken trendlines?

We are closing in on the red long term trendline now. Notice how MACD also broke above it's one year descending trendline. It's hard to see on this chart but it also backtested this trendline and bounced on 10/4.

1:05PM EOD Update

1:05PM EOD - 60 Min

1:05PM EOD - 60 Min

Ok. I think the market just set itself up to pop in anticipation of the employment report for tomorrow.

Using the 60 min chart above, we will either rally out of the ending diagonal in a throw-over to complete this leg that started on 8/26 or we just rally in a final 5th wave.

1173 seems to be an allowable target for either option. I like the ascending trendline in pink (middle one). The market appears to have gyrated around this line and stayed above it into the close. I don't know the significance of it yet but perhaps some Gann folks may see this as something??

For the alternate count, subwave 4 of the ending diagonal looks like it can be counted as complete, however, to fill in the larger diagonal line, subwave 4 can pull back a little more and retest the 1150 level again before the final 5th.

While looking at the 3 min chart, The market looks like it was setting up a nested 1-2 in anticipation for popping tomorrow. Again, notice the ALT labels for what may still be part of subwave 4.

I'm holding my long position overnight.


12:42 PM Update

12:42 PM - 3 Min

Here it is. I think when we tested 1150 today, it was a good opportunity buy a quick bounce and possibly ride wave v up to 1173. We have a clearly defined stop and even if the ED is still playing out as labeled above (ALT) I think a retest of 1150 will occur once more.

However, I have the first two subwaves of wave v working right now. We'll see.

9:34 AM Update

9:34 AM - 3 Min

The bears still need to take out 1150 because the above options are still in play.

9:23 AM Update

The ED will be out if we drop below 1154.75ish because subwave 5 of the ED is greater than subwave 3.

9:12 AM Update
9:12 AM - 3 Min

I'm seeing a wedge forming a possible ending diagonal for wave c of y of iv pink. Hmmm.

8:31 AM Update

8:31 AM - 3 Min

Several options still on the table. Key support levels (1150 being one of them) need to break before we can confirm that the "top" is in.

Wave iv may still be in play as well as the ED option.

6:47 AM Update

6:47 AM- 60 Min

This looks pretty good and we just turned negative.

6:42 AM Update

6:42 AM - 3 Min

Here is the wave iv flat option with the subwave 3 of the ED scenario I referred to in the pre-market update.

And the final option is that this is finally the fifth of the fifth of the end of minuette (i). Yeah, yeah I know, starting to sound like a broken record.

6:31 AM Update

6:31 AM Update

Here's the count as of the open. I think we just count 5 waves up and if it approached 1173 perhaps it may be a good area to short.

However, keep in mind as I posted last night with the INDU, if it is leading, we may break over 1173 only to backtest it and hold as support.

That's jumping ahead though. Let's see what we get today.


Well it appears that we are going to see a gap open again today. This is very similar to the structure we saw the other day when we exploded higher.

On my SPX chart from last night I must label yesterday's pullback a wave iv. It certainly was an alternate though I thought we had more to go.

And unless we take out yesterdays high by a substantial amount, keep in mind this could shape up to be a flat for iv or wave 3 of the ending diagonal option I had also presented.
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