Saturday, September 24, 2011

Weekend Thoughts [10:50 PM Update NDX]

[10:50 PM Update NDX]

Another fiver.

[3:41 PM Update Copper]


I hadn't looked at copper in a while but with PMs splashed all over the headlines, I figured I take a look.

I think this is a pretty decent looking count and it wasn't a struggle to count at all. Seriously it took me literally 2 mins from the sec I pulled up this 5 year chart. The waves were so discernible and  I mean this is the type of wave structure I'm sure R.N. Elliott himself would have said, "Aha! That's an impulse wave up!".

If this is correct, this may even corroborate my bullish SPX count below.

Weekend Thoughts

Based on the charts below I'm expecting a bounce towards the 1165-1175 area over the next week or two.

The Bigger Picture
Here's the bigger picture I've been tracking for some time now. As you can see, there are several ways to count this wave structure off the 2009 low. This is why I continue to stress that for near term wave counting it is better to focus on three waves at a time, whether it be counting 1-2-3, a-b-c or w-x-y.

Until a clearly defined 4th (without overlapping into wave 1) and 5th wave are put in, anything is possible.

So why bother making a case for a super duper bearish Primary wave 3 down? For all we know it could just be a wave C or X of the same degree. Show me waves 1 and 2 or A and B down first.

Anyway back to the count at hand. At the moment I'm thinking my red count option is starting to show true potential here. As you can see below, I'm beginning to speculate a potential ED for wave C yellow.

This is early but would fit with behavior if the market is looking to find a bottom in the 1100-1000 range. Keep in mind wave C should be an impulse wave and just make five clean waves down to the levels. But again, an ED would seem more appropriate as the bulls and bears battle it out to the bottom in an overlapping fashion.
Red Count
I'm favoring this count at the moment but still watching blue for sure. Both still are expected to move in the same general directions. Its more a matter of how they do it and how high.

For the most part each count should generally keep us on the right side.
Blue Count

Trading Range
SPX remains in the 1220 - 1120 trading range. The market found support at the lower end of the range and may be setting up for a bounce as evidenced by the charts below and the counts above.
SPX - McClellan
Throughout the trading range, the market bounced to the high end of the range every time the McClellan Oscillator ticked  higher, even without diverging with price. One difference this time around though is the daily MACD sell signal, so we'll have to see if this pattern continues.

Though I haven't highlighted it on the chart, this also worked for the pullbacks as well. In fact that just occurred last week on 9/16.
NYA - McClellan
NYA, however, does show a clear positive divergence with price.
NYA - McClellan Closeup
Positive divergence on two levels so I believe the bounce for SPX to 1165-1175 is not unreasonable.
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