10/29 - SPX PM UPDATE

SPX 1-3 Channel Lines

SPX 2-4 Channel Lines

SPX MACD Histograms

I don't think today's bounce should have surprised anyone today. It was certainly expected. So far the count has been maintained. Unless 1074.31 is taken out, this is still a good count.

The first chart shows you what was expected this am with the EW trend channels. I initially drew the lines using the end of waves (i) and (iii) with a parallel one to that line to anticipate where (iv) would head. So far so good.

Price retraced 38.2% of the move from 1101 thru yesterday's low. This retracement level lined up well with the first trend channel.

Price, near the close appeared to pivot back down. So with that, I am assuming wave (iv) may be complete.

Now that wave (iv) is complete, I have drawn new EW channels to project where we may expect wave (v) to head. (The new channels are set by drawing a line connecting the beginning of wave 2 and end of 4. Take a parallel line to that and line it up with the end of wave 3.)

Typically, wave 5 should touch the mid-line or lower trend line. In this case the mid-line equals approx 1040 and the lower equals approximately 1020.

These levels would be reasonable to hit and complete minute [i] since they are key support levels. Price may then bounce off this to form minute [ii].

The caveat to all this now is the third chart. I mentioned that I would be watching the pattern with the MACD Histograms. Today put in a lower bar. MACD is beginning to turn back up as well.

Now if price continues this pattern, and if solely using this as a guide, it is indicating that price may try to make a new high somewhere near the green trendline.

Since the analysis worked like a charm for the recent slide, I don't want to underestimate this.

However, given the current count, I think I may give price one more day to play out just in case this pattern finally breaks down.

Not to sound like a broken record but I will wait to see if 1o74.31 is taken out. If so, I would guess the case for a new high may grow much stronger.

Finally, there is also one bearish alternate I'd like to mention. The fall from 1101.36 to yesterday's low (1042.18) may have been minute [i], with today's bounce the beginning of [ii].

I'm not sure though because I'm not too confident I can count 5 waves down to complete minute [i] at 1042.18. A newer high above 1101.36 or course would rule this count out.

That is all for now. I will try to post more later tonight.