Tuesday, September 27, 2011

EOD Update 8:42 PM Update

8:42 PM Update

10 Min

I cleaned up this chart a little bit and plotted some Fib confluences that may be potential pullback targets if the pullback did not complete at 1175 today.

I believe a complete impulse wave down may be counted and keep in mind, it may still be part of an expanded flat and compete at 38% retracement. However, should this impulse only represent a wave a, I expect a 50% retracement of wave a for wave b near 1182 before heading down to either 1164 or 1155.

EOD Update

What a day today. Just when you thought the bulls were in control, the bears arrived to the party. The question now is will they stay or will they be squeezed out tomorrow?

Should this have been a surprise? Not necessarily. So far the target for this leg up has been met. The initial target was 1165-1175 and then adjusted to 1180. The market exceeded that today with a high of 1195 before reversing sharply the last hour of the day.

Now we must determine if this complete the first leg for wave (Y)/(C) of blue (blue option) or the more bearish wave ii gray of iii red (red option). I believe it is still possible the market pushes higher thru the end of this quarter. Please see below for those reasons.

5 Min

The 5 min chart below highlights the internal count showing possibly a wave (w) or 3 completed at the 1195 high. The pullback into the close was either the beginning of  a wave (x) or completed a flat representing all of wave iv or 4. These options apply for the blue count

A near term target for the blue count, if wave (w) or (a) is not complete yet is approximately 1204.

Blue Count

The reasons supporting the blue count:

1. VIX Equity buy signal
2. Bounced and closed above the lower trendline connecting the 8/9 and 8/22 lows.
3. Bounced at the 38% retracement  of wave 3 or (w)
4. Daily MACD looks set to issue a buy signal. (This could easily be rejected)
5. Both wave 2s for the red count are very steep retraces (approx 78.6% and more), which make that count very suspect. Not invalid, but just lower on the likelihood scale.
6. EOQ window dressing

Red Count

As for the red count, the last hour selling is the beginning of wave iii gray of iii red down.These are the reasons supporting this count.

1. The late day reversal
2. Close back below the 20 day SMA

VIX Equity Buy Signal

Trading Range
I posted this simple trading range last weekend. The market just so happen to close below the mid line for the red range. Let's keep an eye and see if it manages to trade back above.

Red Range
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