Tuesday, November 9, 2010

11/9/10 - EOD Update - 9:15 PM

EOD Update - 9:15 PM


This 9:15 update is not so much about EW (well sort of since I have waves labeled) but a play on the pattern between the rally into Apr and the current rally. Without staring at it too long, they look pretty similar to me. They even appear to rally out of a very similar correction.

Both sport triangles right near the top. If these are playing out the same way, it appears the current rally completed it's wave iv or nearly completed it. The one in April ended with a hammer before a final push to complete the high. We'll see.

SPX - 60 MIN

A look at the hourly shows two more similar patterns. A flat that started the triangle in mid Oct. Today the market completed a similar pattern.

Now with all that being said above, the market could have easily put in a top today. That is still not my preferred count, but something I'm very mindful of.

So if minute [iii] topped, let this chart again serve as a guide to determine what is in store next.

If were are now in a minute [iv] pullback, look for a proper Fib retracement that should not exceed 1129.24. Remember that wave 4s typically retrace within the previous fourth wave of one lesser degree.

In this case, minute [iv] would retrace into the triangle it just broke out of. The range would be between 1182-1155, which corresponds with a 23.6 and 38% retracement respectively which should be near the level of the triangle.

Should we see selling that takes out 1129.24, then the larger flat becomes the primary count.

EOD Update - 2:28 PM


Here's the 1 min view on why I don't believe wave v of minute [iii] was put in today. It counts too much like a three wave move off the 1217.73 low.

EOD Update



As suspected earlier this AM, a larger flat was in the works. At least that is my primary view.

The structure most likely completed today and retraced the 11/3 rally a near perfect 38% and retraced back into the price territory of the previous wave 4 as is typical.

I show both 15 min bar and candle charts just to highlight the candle hammer that printed at the close. The bulls will need to confirm it if their case for a higher high is to come.

On the same 15 min chart, I have labeled Bear 1 and 2 as nested waves down. This would be the bear scenario if today's high was the top of minute [iii].

I still lean towards the wave (iv) flat scenario as my primary because I do not think wave v of [iii] put in today because that move up this AM counts better as a three wave structure. I'll post a 3-5 min chart later tonight to highlight that.

The daily chart below shows the bigger picture and one can argue that a double top may have been put in today.

Earlier (in the chatroom) I speculated that shorts would naturally jump in here. Why not? The market has already extended higher, re-tested the 62% retrace of the 2007-2009 decline, a double top formation and a wave structure showing the leg up is very close to completing. So naturally we saw the sell off today.

The question of course now is was that the top for minute [iii]? I think we will know shortly.

Some additional charts below for your viewing pleasure.

The 50% fan is proving itself to be a challenge here.

SPX - Cup and Handle

If we did see the top of [iii], keep this formation in mind.

More charts later.
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