Friday, December 9, 2011

12/9/11 - EOD Update

The past several weeks have been challenging and rewarding all at once. Last night's call that the pullback was complete was yet again nicely timed.

If you missed me today in the CiL or on Twitter (at right), I discussed in real time today 2 areas where one could have enter long for an intraday trade based on EW.

I do not do this often and I maintain that it is not a recommendation to trade. However, it was a good example to teach others how EW can be used.

SPX - 5 min
This 5 min chart highlights the pullbacks where these calls were made. If you browse the CiL, check out the entry at 10:15 for the trade and 10:17 for the stop.

The 2nd example was mentioned at 11:44.

The technique can be applied at other time intervals. Today's 5 min chart was a good time to show this since the wave structure was developing quite clearly.

As far as the counts go, I believe the market is working on wave v which is subdividing in grey. Since wave iii is shorter than i, wave v cannot be greater than iii. Therefore, wave v cannot exceed 1263.

This would make for one more attempt at the 200 day SMA. Wave 1 completes here and is smacked down into a wave 2 before shooting higher through it for the 4th attempt.

I can easily call the top at 1258.25 today as well where I have wave 1? labeled. I'm giving the subdividing wave v the benefit of the doubt at the moment since the late day buying and selling held along the ascending trendline.

As for the ascending trendline, somehow that may be hinting at a larger ascending triangle that may be forming  as well so we need to keep an eye out for this.

Should the market pull back below 1252 starting on Monday, I will feel more confident that five waves up off the 12/8 low are in.

SPX - 15 min
The 15 min picture with the sub-alternate in red. The flat for wave (b) is a good alternate to watch out for, especially if it turns into a running flat.

This would fool folks buying the breakout over the 200 day SMA and then trap the bears selling it back below, while the market maintains above the 20 (1226) and 50 (1219) day SMAs.

SPX - Daily - Primary
Here's the primary daily picture I have maintained. So looking at it from this perspective, the market is in the midst of shooting higher in what will be a third wave.

At the moment, that third wave may be wave c of y or 3 of 3.

Triangle Option 1
This AM in the CiL, I posted the Triangle Option 2 chart below, which came to me randomly while I was noticing the series of three wave structures on the hourly. When I zoomed out to the daily, that is what I say.

Upon looking at this some more, I came up with Triangle Option 1 as well.

Just something interesting to think about for now. We'll come back to it later should there be more evidence of this playing out.

Triangle Option 2
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