Wednesday, December 1, 2010

12/1/10 EOD Update [Edit 10:13 PM]

[Edit 10:13 PM]
SPX 3 Min

Here's an internal count to support both 1c and 1b. It is possible there is a nested 1-2 setup but I won't address that if it appears the market puts out multiple 3-4s.

[EOD Update]

I thought I would have more to share tonight but all I have are the updates for option 1b and 1c.

Option 1c

I didn't have to change anything here. Wave [c] of c/y accelerated out of the gate as anticipated. I still leave the option at the top as c/y because [A] and [B] could very well turn into a five wave impulse to complete wave c versus the [A]-[B]-[C] that would make up wave y.

I place this option first because it counts the easiest and for some reason I still remain cautious calling an end to Minor 4.

Wave form wise, it just doesn't "look" right nor does it look proportional compared to the size of the Minor 2. Please see the chart below.

When I created this chart, I drew the channels based on the 1-3 line (end points of waves 1 and 3). Generally EW channels allows one to predict where wave 4 may land based on this channel.

Though it is not a hard set rule it is a tendency that has been observed in the past. Looking at the channel that was previously created, Minor 4, if complete now, only travels a little more than halfway across.

It just looks a little too narrow especially if alternation were to be considered. Alternation of course is not a rule either.

But because there are tendencies for wave 4 that have not been met and the fact that option 1c remains a valid count, I remain cautious and will continue to monitor this as an option.

Option 1b
Now for option 1b. I removed the ending diagonal option from earlier. At this point I think it is moot because the ED or the double zigzag as I have it labeled ends with the same result.

Based on this count minute [i] of Minor 5 is underway. Now it is debatable how the squiggles may be counted. For now, because it appears that we only have three waves up, my wave i is at 1184.53.

Should a pullback occur and retrace into this level, I will most likely rule out the impulse wave count.

Another version of the count that I like a lot is one put out by Daneric.

Here is a look at the daily MAs and MACD that would support option 1b. I just wanted to highlight the trendline support for MACD.

As Minor 4 had been playing out, I was anticipating that Minor 4 would complete at this trendline. So far that seems to be the case. So it is possible we have seen the end of Minor 4.

But just looking at the chart above, price respected the center channel and MACD is looking bullish.
I'd like to see 1200 hold as support going forward and no more than 1190 to further confirm that Minor 4 is in. This would equate to a 38-62% retracement for wave iv to wave iii of Minor 5 based on the option 1b count above. And this all assumes wave iii is complete, which it may not be.
blog comments powered by Disqus