Thursday, November 11, 2010

11/11/10 - EOD Update [EDIT 10:22 PM]

[EDIT 10:22 PM]

Looks like futures is headed for that lower channel. As of 10:22 PM PST, a low of 1198 was printed.

[EDIT 7:29 PM]


Wow. Will have to see how this holds overnight.

If it does, my (x) wave may be over.


The dollar is up again horizontal resistance.


Based on today's action, it makes sense that option 2 from yesterday's EOD post is playing out and that is we are in Minor 4 down.

I have also made some changes to the degree labeling on my chart. Actually I just labeled things to correspond to their correct degrees. (I have been lazy the past few weeks in keeping the degrees intact. I think many of you saw the different colored labels to differentiate the degrees)

The main thing to take away from the degree label changes is that I have changed the minute count to Minor. So Minor 1 is the leading diagonal off the July low. Minor 2 is the retrace down to August and Minor 3 is the rally off that low up until now.

So at this moment, there are two basic options that I am watching:

Option 1. Minor 4 is in progress

- SubOption 1b. A flat is playing out of for minute [a] of Minor 4.

Option 2. Minor 3 is still in progress and we are working on minuette (ii) of minute [v] of Minor 3.

The charts below should help highlight these options.

SPX - 30 MIN

The price action over the past two days forced me to really drill down the count at the 1227 top. There has been much debate as to the completion of Minor 3 with minute [v] of Minor 3 truncating. I believe this is the case.

Minuette (iv) of turned out to be a combo corrective: flat wave w - x wave- expanding diagonal wave y and then five tiny little waves up for minuette (v) to complete minute [v] of Minor 3.

I currently believe a double zigzag is in the works off the 1226.84 for minute [a] of Minor 4. So far wave w completed today and the bounce off the bottom is wave x in progress.

I believe we started wave y of (x) into the close, which I have approximated to target 1217-1222 if the corresponding Fib extensions apply.

What could happen instead of the zigzag is that this turns into a flat. That would mean that my wave (x) above may put in a new high or close to the previous high before wave (y) down.

I present this option here because of a potential 'W' bottom forming today. See the chart and comment below on this.

At this point several options exists for how Minor wave 4. It may also form a triangle. I won't present that option yet unless the evidence starts to build.

All I know is that if we are in Minor 4 we should see a series of three-wave structures playing out.


So what is our target for Minor 4? Using a few EW basics we can project to a degree by doing the following:

1. Create a channel using waves 1 and 3 and drawing a line parallel at the wave 2 termination. Typically wave 4 will terminate at the bottom of the channel.

2. We also know that wave 4s like to retrace wave 3 approximately 38% or so.

3. We also know that wave 4s retrace into the previous wave 4 of one less degree. In this case the triangle in Minor 3. Typically it targets the terminus of the prior 4 but could retrace anywhere within it.

4. We also know that wave 4s cannot retrace into 1 so we have a floor before ruling it out as a wave 4.

So ideally we are looking at a minimum retrace into 1195 and possibly as low as 1155 if hitting the typical retrace levels but may go as low as 1130 but no lower than 1129.24.


This looks like a pretty good 'W' pattern playing out that would set up minute [a] of Minor 4 as a flat. The hourly MACD histos is indicating a possible move higher before the daily MACD (which is looking bearish) turns lower.

For more on this pattern check out this link to Bulkowski's website .


I just threw in my daily because I haven't done so in a while.
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