Dow Transports 9/30

It appears the transports have now sported a five wave impulse down since my last post. This may very well be a minuette (i).

A minuette (ii) also appeared to be in progress with the completion of wave b of (ii). Assuming wave b is complete, Fib expansion ratios may help identify the top for (ii). If the count is correct, a minuette (iii) should follow and push price through the P2 lower trendline.

SPX - 9/30 AM Update: Minute [ii]

I almost forgot this count as well. I have labeled it an alternate but there is a good chance this could be the primary especially if 1069 is taken out.

SPX - 9/30 AM Update: Minute [iii] 1-2s?

I am not so sure of the degree labels, but this is one scenario I see as being possible given the structure so far.

We will see...

SPX - 9/30 AM Update: 4-1 Overlap

UPDATE: I just updated the chart with the 1039.47 line.

Here's the count for the AM. So far it looks like we have a 4-1 overlap, which invalidates the minute iv alternate count. 1080 so far is looking like the top.

Price is riding the lower P2 trendline on a subminuette/micro wave iv of subminuette/minuette wave iii. Wave v should break below it.

Still watching for a break of 1039.47 to further confirm that we are in a trend reversal.

SPX 9/28: Wave 1 LD-

I just wanted to put this one out there again with a closer look at the possible LD that ended today. They are pretty clean three wave structures. But of course this could just easily be a wave 4 expanding triangle.

And say it is a wave 4 triangle. This would make for a nice 5 wave impulse up from the 9/25 (1041) bottom. If that bottom is minute iv and this new impulse is a minute v, it is also possible it completes tomorrow and truncates.

Either way, we should see a move higher at the open. Take a look and decide for yourself.

Dow Transports

I posted a transport chart a while back and wanted to provide one with the updated price action. It appears that wave (c) of Y (green) topped at .618 x (a) of Y (green).

The following price action appears to be working on a five wave structure down. Could she be telling us something? She certainly does not look like she is setting up to confirm anything to the upside anytime soon.

The extremely bullish count is that a series of 1-2s have developed starting from the X wave low. I do not have this alternate count labeled.

The first 1-2 would be (a) blue and (b) blue respectively. The second set would have 1 top at wave Y? (green) and the subsequent pullback a wave 2.

SPX - 9/28

Ok. No more counting for me. Time to do some real work.

Still watching those levels...GL!

SPX - 9/28 Mid Day Update: Minuette (ii)?

61.8% on the money so far. Is this it for wave 'c' of minuette (ii)?

Time will only tell. Just keep an eye on those levels previously mentioned.

SPX - 9/28 AM Update: Minuette (ii)?

So far, I can count 5 waves up for wave 'c' of minuette (ii). A touch of 1060-1065 will result in a 50-61.8% retracement of the 9/23 high (1080) and 9/25 low (1041).

Still keeping an eye on the same levels to give us a better idea where she's headed.

> 1080 = P2 still in progress
< 1039.47 = good chance P3 in progress

SPX - P3 H&S?

UPDATE: I realized I experienced a brain f@rt when labeling the chart for the head and shoulders measured distance. I meant to label the measured distance for the head and shoulders as the distance between the head and "neckline" vs "shoulder".

I know this is getting way ahead here but I just couldn't ignore this (let alone stop myself from posting this).

So let's just assume P3 is under way and assume Minute [i] (green) takes us all the way back to 978.51 (a pretty strong support level now). Then say Minute [ii](green) retraces Minute [i] 61.8%.

Not only would this make for a nice retracement, but Minute [ii] tops out at 1040 (new resistance). This level would just about equal the left shoulder. As a result of this move, the beginning of right shoulder is formed.

This price action is certainly plausible. A drop to 980 may bring in a new round of dip buyers since everyone is talking about and expecting a 5-10% correction. 10% of the 1080 high would get us near the 970 level (972 to be exact).

All this would be followed by a nasty Minute [iii] following a poor Q3 earnings session and a sell off in November just like November 2008.

Two interesting points on Minute [iii]. If one takes the measured move of the H&S pattern, the expected move would take the index down to the 880 level (a very strong support level). If we assume that Minute [iii] = 1.618 times Minute [i], Minute [iii] lands right on the nose in the same area.

Now that is some eerie stuff.

SPX - 9/25

Well, not much was changed today other than a few label changes. What appeared to be a complete five wave structure yesterday was more clear today. I just moved minuettes iii, iv and v.

I am still looking at generally the same levels and structure. Next week should either bring the beginning of a new five wave impulse up to complete Minute v of P2 or the completion of subminuette wave 'c' to complete minuette (ii) of a new impulse down of P3.

Look at how close price came to the key trend lines. Next week will be very interesting.

I must also point out another alternate view is that minuette (iii) was underway today. Change my subminuette iii to minuette (i), subminuette v to subminuette i of minuette (iii) if that makes sense.

OIH Update: 9/25

I posted a chart a while back on the OIH. I think I was a little early on that but I think this may be a more accurate count.

It appears a wave 'c' may be in the works. I guess we will have to see.

Of course the alternate is that wave 'b' was a triangle that retraced 'a' and 'c' would have much higher to go. However, I am not so sure of the alternate given the negative divergence seen in the MACD. But then again, we have seen a negative divergence in other indexes as well for a while now.

SPX - 9/24: Bullish Count

As I mentioned earlier I would post a bullish count. Here it is.

With waves 2 and 4 now complete, we may place EW trend channels to assist us with locating the end of Minute [v]. An end at the mid channel line over the next week or so would take price near 1090.

In a previous post (Fibonacci Fans), 1090 was the 61.8% retracement for the decline that began on 10/07.

As I mentioned earlier I do have a problem with the count for wave b of Minute [iv]. It looks more like 5 waves to me, which would invalidate it as a 'b' wave. But what do I know.

SPX - 9/24

Impulsive waves are clearly much easier to count than corrective waves. The question of course is this truly impulsive?

I have posted a bearish count here and briefly describe why I don't have a bullish count (of course as I'm posting this, I think I can provide a bullish one. If I find some time I will).

Price is coming up on some pretty important trend lines. The green and black (significant) ones on the chart need to be watched.

A break of the green would rule out the bullish count (that being a Minute iv expanded flat), since that would create a 4-1 overlap. A break of the black line would be pretty bearish since this is the lower trend line connecting the 3/9/09 low and 7/8 low.

If the move off the 9/23 top is truly impulsive, it completed five waves today at the 1045.85 bottom. It appears an a-b-c correction (specifically a zigzag) was in progress into the close.

If wave 'a' is complete, I also see 'b' complete. All that is left is wave 'c' towards the retracement levels. Will the 40 day SMA hold it down?

I did not plot the 10 day SMA but on the daily chart, the 10 day SMA = the 40 SMA on the 15 min chart.

If the correction into the close turns out to be a zigzag, it further strengthens the case that it would be a wave 2 since wave 2s are typically ZZs. If it is a wave 2, watch out because a wave 3 will follow and most likely pierce through the green and black lines.

I will also mention that if today's bottom was Minute iv the following would be targets for Minute v:
Minute v = i = 1106
Minute v = .618 x i = 1083

SPX 9/22 AM UPDATE: Wave 5 of C version 2?

Or what about this scenario?

SPX 9/22 AM UPDATE: Wave 5 of C?

Looks like either an ED to complete this run or an LD to begin the end of this run?

Trend Channels and Fibonacci Fans

Just trying to keep things simple and hopefully look at Fibonacci retracements in a different light by using the Fibonacci fan.

I like how the fan trendlines highlight support and resistance. I have indicated this with the green circles.

It will be interesting to see as price is nearing 1100 if the 61.8% trendline will act as resistance. It appears highly probable given that the trendline intersects with the middle trend channel of the A-B-C structure right at 1090.

If one were to consider the upper trend channel of the A-B-C structure (red) and the (W)-(X)-(Y) structure the range would be approximately 1072-1124.

Citigroup

Anyone still around? I know it has been a few days since I have posted anything. I have been busy and quite frankly too tired to figure out what has been going on with the major indices.

Dan, Kenny, Nate and others have been doing their best and a fine job at that. As of today it appears they may be on to something now.

I think my previous posts on trend lines are what I am watching and not so much counting at this point.

So I have turned my attention to Citigroup. I don't know if true EWs are playing out here but if I just start from the March 2009 lows, I see a potential A-B-C corrective pattern playing out.

The final wave C formed an Ending Diagonal, which of course, is a very rare formation. According to EWP (Pg. 37), EDs are "found at termination points of larger patterns, indicating exhaustion of the larger movement."

I guess if we take this along with what is expected with the broader market, this may correlate nicely.

I also highlight what appears to be a head and shoulders pattern developing as well.
The expected move for the ED and H&S play out near the support line I have highlighted in green. Let's see what happens.

SPX - 9/15: Ending Diagonal

Well here is the end result for today. It does appear to be an Ending Diagonal after all. See my previous post before the close today.

The fifth wave of the ED even had the signature throw over, which is typical with wave 5 ending diagonals.

Does this mean that we have topped? It is highly likely, however, does it mean P3 has begun or did we just complete the first wave of five for Minor C and this would only be a minute wave 2 pullback.

Regardless, a pullback should ensue and one that takes out the 992 low would rule out any chance of a new 5 wave impulse for Minor C and indicate that we are more likely in the beginning stages of P3.

You do have to admit that price has moved into the area where all the trend lines have converged. Tomorrow will be an interesting day.

GL!

SPX - 9/15: Wave 5 ED?

Adding to the chart from yesterday's post, it appears at this time (still may be too early to call) that Minute 5 is forming an Ending Diagonal. The target for the wave appears to remain the same 1060-1070.

Just watching and waiting...

Elliott Wave Trend Channels

I have been busy with work and travel so I have not had a chance to post anything. At this point I thought I would just highlight some EW trend channels.

I think it is probably safe to say that we are working on Minor C to complete Intermediate (Y) and with that Primary Wave 2. Price is fast approaching the center trend line for both the Intermediate wave and Minor wave channels.

An intersection of the two takes SPX somewhere between 1060-1070. I will be keeping an eye at this level.

I hope to provide a more in depth analysis shortly once I free up some time.

SPX - 9/9: H & S

Who knows if P2 is over and if P3 began. Let's just remove all EW labels for the moment. At this point, all I know is what I see.

So far, the H&S pattern that I spotted developing a few weeks (check the archive for the previous posts) ago appears to still be on track. Price touched the upper trendline to form the peak of the right shoulder.

Let's see if price bounces off this and heads back down towards the neckline. If it does, I will be watching the 993 level.

As far as counts go, well, we will have to see...Just don't forget, price is getting very close to the apex of multiple wedge lines so be careful.

Not trying to call a top but I wouldn't open any new long positions either. I think a decisive break (either direction) out of the wedge should tell us shortly which way we are headed.

GL!

OIH; Ready For A Pullback?

Is the OIH ready for a pullback? I haven't had a chance to nail down the exact overall count here but that is not all too important at this very moment and at least not for what I want to point out.

As far as EW goes, if a clear 5 wave structure can be identified, than it would stand to reason that a 3 wave a-b-c corrective would follow. That is why I mentioned above that the exact count was not too important.

If the structure I have posted has been correctly identified, an abc corrective move should be occurring.

So far, wave (a) has completed and wave (b) appears to be forming a triangle. Though price has not touched the upper trendline for wave e (and it doesnt have to) the 60 min chart I have provided shows that wave e of the triangle may have completed.

If wave e is not complete than I would expect it to hit the upper trendline before thrusting lower.

If it has and if this is truly an abc corrective, than wave (c) may find it's way down to equality with wave (a) or 1.618 x a.

XLF Top?

Is it possible that the XLF has topped? Like the transports, the XLF's price action thus far has resulted in Wave Y developing a few Fibonacci relationships to Wave W green and Wave (a) blue.

The main difference with the XLF and the transports as well as the other indices is that it broke below it's lower trendline. By the close, price appeared to be attempting to backtest the lower trendline.

The second chart posted here shows a close up look at price with candlesticks. So far price retraced 61.8% after the break below the lower trendline. It then bounced once again and began to head lower.

Is it possible this may be the beginning of a new impulse lower? Could this structure be counted as a 1-2 of the beginning of P3?

This is an interesting chart. Will the financials lead once again?

Dow Transports

Not sure what to make of this but perhaps the transports may also provide some guidance? I have labeled the transports as a double ZZ.

Given today's price action, Wave Y (green) closed at a nice .618 x Wave W (green). Price here is also approaching the upper trendline of the bearish wedge. This technically, would suffice from an EW wave count.

If the transports have a a little more to go (which I think it may), that would complete Wave (c) blue at .382 x Wave (a) blue and place price right at the upper trendline.

Either way, I think the transports are also close to rolling over. If I have time, I will look at other sectors as well.

SPX 9/8 PM Update-

I hope everyone had a nice weekend.

I had no time today to count waves. Nevertheless, I think these two charts speaks volumes. That is one bearish wedge.

1039 and 978 (probably can move this up to 992 as well) are the two levels I am still watching. But I will say, even a break of 1039 may not mean that much at all if this pattern holds.

SPX 9/4 PM UPDATE- H&S In Progress or MINOR C?

A Closer Look


A Much Closer Look



So far price has continued to move along the projection (arbitrary of course) lines I plotted earlier in the week with some minor adjustments(See post). The right shoulder appears to be developing as projected, but we won't get ahead of ourselves here.

Without a doubt there is still no resolution for either the bulls or bears. The count may still go either way.

At this point in time, my count is for the bears. Until the bulls can prove otherwise, I would expect some resistance at 1018 before a reversal lower.

So what happened since yesterday? I can only guess that minuette (i) of P3 completed at the 994.37 low.

The rise from this bottom carries two potentials:

1. For the bearish count, I will take Dan's count here and apply a double zigzag for minuette (ii). This count looks like it may work. We will know shortly on Tuesday.

2. On the bullish side, we may have witnessed the beginning of minute [iii] for Minor C to complete P2. The wave can certainly be counted as a potential 5 wave impulsive structure, especially if you look at it on a 15 min chart and higher.

One thing that appears to be clear towards the close is that the final subminuette v is most likely going to end with an Ending Diagonal.

Things I'll be looking for next week.

1. A break below 978 will confirm the bearish count is still in play and rule the current bullish count invalid.

2. A break above 1039 and the bullish count is confirmed.

Happy Labor Day! Get the grill out!

An Almost Pefect 5 Waves

I just had to post this pattern from today's SPX count. This is what I find so intriguing about EW.

This pattern is a pretty clean 5 wave structure that one cannot deny. The waves behaved according to EW rules and guidelines almost perfectly.

Notice waves 2 and 4 (blue). They both show alternation. Wave 2 is a little sharper in it's correction and wave 4 played out it's typical triangle (sideways move) while alternating (sharp vs sideways) it's pattern with wave 2.

Look at the perfect little sub-waves for wave 3 (blue) in red. Again, waves ii and iv show alternation.

The triangle pattern played out as well with a thrust lower (in true fashion) to create wave 5 (blue).

Wave 3 blue is definitely not the shortest wave (and it doesn't have to be the longest wave, just not the shortest of the 3 actionary waves) and it is usually the longest, which in this case it is. This makes it easy to spot wave 3s.

Once this structure has been identified, can we make a trade with it? Certainly. An example of how one would work this:


Given the 5 wave count, one would expect a correction at the end of this structure. A position may be taken on a play for the corrective action up.

A stop may be set below the 5th wave. Targets for the corrective action would be assisted with the Fibonacci retracement percentages along with the proper wave count.

One other thing I will add. This structure may also be counted as an abc correction. Replace wave 3 (blue) with 'a', wave 4 with 'b', and wave 5 with 'c'. This,however, does not change the fact that a turn would be expected at the conclusion of this structure.

In fact, one must keep this in mind because if the corrective action following this structure continued much higher than the typical Fibonacci percentages, it may be a clue that this structure was corrective after all. One then must assume that the prior trend will continue higher.

SPX 9/4 AM UPDATE

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UPDATE (10:40 PST):

I just caught a mistake in this count. In order for this to play out as an ED, wave 4 would have to retrace into the territory of wave 1. I think that is highly unlikely.

So I would think the main bearish count would have to be a straight 5 wave impulse to complete wave c or it is a bullish Leading Diagonal.
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Perhaps we are seeing an Ending Diagonal for wave C of a double three corrective?

A bullish option would be a Leading Diagonal for a wave 1 up. Its all still unfolding.

If it is an ED, I see a potential top near 1019, which I have projected all along for this corrective.

We shall see.

SPX 9/3 UPDATE

Chart 1


Here is a another attempt at these squiggles. This may make sense but who really knows at this point.

I am counting the spurt at the end today as the final wave c of Y of iv. Here are some targets for c as it relates to wave a (blue).

1003.43 = c at a possible previous fourth wave extreme
1007 = c = 1.618 x a
1014 = c = 2.618 x a

It is possible that wave c did complete today. If the previous fourth wave count is correct, this would fit well with the behavior of wave 4s. Plus, wave c is greater than equal to wave a. If it is not, I will be looking at the levels mentioned above.


Chart 2


I took a look at the daily chart because I have mentioned in the past it helps to take a few steps back to see what the overall picture looks like. Of course from this I still see two potentials in either direction.

Potential 1:

Based on form alone, the structure appears to be developing a five subwave structure. Whether this is impulsive or corrective, it is implying that there will be more downside to come.

If impulsive, this looks like it would be completing wave 1 at a higher degree. Naturally we would expect two more impulsive waves down (3 and 5). If this were true, price would certainly break below the 978 low redndering the alternate count invalid.

If this were corrective, the 5 subwave count would imply that a zigzag was in the works. Again, I would expect one more wave lower (for wave c), which would most likely take out the 978 low and again render the alternative counts invalid.

Additionally, if this wave were corrective, it would require a complete recount. That I won't even attempt unless it is warranted.

Chart 3


Lastly, this may not mean anything but looking at the charts in different ways may shed some light on things. Prechter, in The Elliott Wave Pricinple, mentions that R.N. Elliott liked to keep tabs on the hourly close charts. I am assuming this would be very similar to a line chart.

Given this depiction of price, it appears that all we are seeing from the top is the development of one wave down with a second beginning to correct it. I believe this is not the best way to interpret waves because it does not capture the intraday highs and lows and ultimately may distort the count.

However, I would argue that it may still provide a little assistance when one seeks a little clarity. Notice the form of Minor A and B. The line chart still correctly presents the structure in form.

Just some things to think about.

SPX 9/2 PM Update

Wow. I have a headache. Those were some squiggles today.

In the end, I counted the waves incorrectly. It sounded like a good idea in the beginning. At least it was determined as the day progressed that we were seeing some type of wave iv developing. The main give away was it's sideways action.

So I'm going to move forward and not worry so much about the squiggles because the little thrust we had at the close most likely signaled the beginning of wave v (most likely minuette). This would bring to an end wave 1 of a higher degree. Again, I'm still going to remain neutral on what degree I will label these waves for now.

I have placed some Fibonacci percentages on the chart to provide guidance for where I think wave (i) of P3 will end. Notice on the chart, wave v of (i) of P3 equals .618 x i at 988. This lands perfectly at the neckline.

And of course getting ahead (because it's fun to try and figure out where we may go), I noticed a nice 61.8% retracement of this leg down would place price at approximately 1020. I say that will be the length of wave (ii) of P3. I believe 1018 is a over resistance as well.

Things that I'm thinking about. Will wave v take the entire day to develop? I'm not so sure. If so, does a go jobs number on Fri spark a mini rally for wave (ii) of P3. Perhaps the Friday before a three day weekend may add to that as well. How long will wave (ii) of P3 take to develop?

If we break through the (W)-(X) line that may be bearish and possibly head lower than anticipated?

SPX 9-2 AM Update: Wave 3 Subdividing?

UPDATE #4 (11:10 AM PST): Ok given the action thus far since the beginning of this post, the wave structure has dragged out quite a bit sideways. This could be counted as a double three as well and just about give us a wave iv.

We will just have to see how the wave plays out once this retrace is complete to determine whether we are in another wave 3 or just wave 5 to 980.

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UPDATE #3 (10:50 AM PST): A wave b triangle afterall? Targets for c of red 2 does not change. It should be in the same area


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UPDATE #2: Here is another way to count this:


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UPDATE: I have added this chart below to highlight wave c =.618 x a. A break above 1002.47 will invalidate this scenario. (Thx OCO!)





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This is my attempt to count the squiggles since yesterday's fall. It appears to me that wave 3 (I am unsure of the degrees at this time so I have just labeled the waves according to count and not so much degree) may be subdividing.

If I had to guess, I would guess that it is either subdividing at micro or subminuette degree.

The retrace this AM is looking like a zigzag to me, which tells me it is a wave 2 of some degree. I projected an end for this if the wave b is a triangle and c=a. 1005 may be a target for this retrace.

We shall see...