Monday, November 1, 2010

11/1/10 - EOD Update #2

SPX - 60 Min

Here's a recap of the 60 min chart again. I added an alternate label at today's bottom and will mark it as wave [C] should this turn out to be a complex corrective.

The preferred count at the moment is that we completed the triangle today. But until we take out 1196.14, the alternate is something to keep in mind.

Notice that the rise since 1091.15 on 9/7 has formed a very nice channel. Should the triangle thrust come through, a likely target may be the top of the channel. The blue line marks 11/3 and the intersection with the horizontal line and top of the channel is approximately 1220.

Perhaps, as I first speculated two weekends ago, we rally to this target on the heels of the election and FOMC meeting minutes.

SPX - 15 Min

Another look at the 15 min with the alternate label.


EUR/USD

The EUR/USD is still in it's triangle and perhaps completes e overnight and tomorrow.

CCI

This chart still concerns me. CCI is on the verge of crossing back up through 100 but will be met with the trendline resistance. When and if the triangle thrust occurs, will this trendline be broken or reject it the fourth time?

STRATEGY

For those still scratching their heads trying to figure out how to count the mess off the Aug lows, I have a more simpler approach.

Since the July low, we see three waves up. It may be counted as 1-2-3 (my preferred) or A-B-C or W-X-Y.

Since no one is too sure that the move off the Aug low is a true impulse five wave move, I say don't worry too much about it right now. In fact in the Elliott Wave Principle (EWP), Prechter says that if one cannot make sense of the form, step back and don't do anything and let the waves work themselves out until there is something more clear.

So using our current structure, we know that some type of triangle is forming. We know that triangles represent either a wave 4, B or Xs. We also know that triangles occur in a, "position prior to the final actionary wave in the pattern of one larger degree, i.e, as wave four in an impulse, wave B in an A-B-C, or the final wave X in a double or triple zigzag or combination."(EWP pg 51).

So based on the above, we know an end to this leg is most likely coming. What type of pullback we see will determine if the rally off the July low is a five wave impulse up vs an A-B-C or W-X-Y correction.

What level will determine this? Simple. 1129.24.

Should the market pullback and retrace below this level before we see a clear five waves up, the market will have confirmed that the rally off July was only a three wave correction.

That is it. So I say, until this level is taken out the impulse count up off the July low is still very valid.
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