2/27/10 - Similar Waves of Two Degrees Part 2

One Potential Count

Daily

60 Min

As mentioned in my previous post on this potential count, I have added two charts highlighting the Fib relationships of the expanded flat for wave 2 in both degrees.

The Fib relationship of minuette waves (a), (b) and (c) meet most of the EW guidelines. The only issue would be wave (b)'s relationship to (a). It is 1.83. This is a little high since the guidelines are generally 1-1.38.

The Fib relationship of subminuette wave b to a is 1.43. Subminuette wave c, if almost complete, would be 1.618 to a. Once again, these are decent Fib relationships per the guidelines.

The other two Fib relationships that meet the EW guidelines:

- Minute [ii] retraced minute [i] approximately 61.8% (found on daily chart; blue Fib lines).
- Minuette (ii) is looking to retrace (i) approximately 78.6% (found on 60 min chart; green Fib lines)

The alternate count, of this one potential count, is that the move off the 1044.50 bottom is a 5 wave impulse representing minuette (c) of minute [ii].

If 1112.42 is taken out the subminuette count [waves (i) and (ii)] is off the table. This would bring the alternate count mentioned above into play and of course if 1150 is taken out, this is all off the table.

Trendlines and channels may have been drawn in that indicate resistance levels at these targets. I chose not to do so at this time because I wanted to keep this chart as clear as possible (plenty notations already).

I believe most readers have seen the trendlines and channels I have placed in my previous charts as well as what other bloggers have been posting.

Either count would work for the bears and would imply a wave [iii] or (iii) is coming up shortly.

2/26/10 - SPX EOD - Similar Waves of Two Degrees?

One Possible Count

Alternate Count

I guess I didn't miss too much today. It looks like the nested 1-2 count is out the window. However, I don't think the count is out for the bears just quite yet.

The top chart is one potential count I am looking at. I find the structure very interesting. The subminuette degree waves appear to be very similar to the larger (minute) degree wave structure. The color coordinated arrows on the chart highlight the similarities.

Is it possible that both wave twos (minute and minuette) are expanded flats? I will post more later on this over the weekend and highlight the wave ratios, which indicate that this count is potentially one valid option.

The alternate count is also posted up top. Price climb higher ever so slightly.

It is getting close to the mid-channel (black) line and wave 5 of the alternate count shows the beginning of a possible wedge formation. Wedges indicate that a move is coming to an end.

SHOULD THE BEARS BE CONCERNED?

2/25/10 - EOD Update

Preferred Count


Alternate Count

What a reversal today. It sell off started off on a very bearish note but the bulls were able to pared down the losses.

Not much has really changed in terms of my preferred and alternate counts.

Just a few comments on my preferred count:

1. Until 1106.42 is taken out, the 1-2 1-2 count is in play.

2. Dan and Kenny pointed out the Leading Expanding Diagonal (LED) count (I have placed the expanding trendlines in green. I think this is a very strong possibility.

Whether this is the count or the nested 1-2s, both imply the same thing, a wave 3 should follow.

The Fib retracements are for the LED count. Based on that, price has retraced 61.8% and 78% gets it just under the long term bear trendline. The LED count is off the table if the SPX cranks out a new high over 1112.42.

So until 1106.42 and 1112.42 are taken out, the count remains bearish.

As for the alternate count I have above, I show wave iv complete. If this count is correct, I would expect wave v up.

Some comments on the alternate count:

1. A new channel (black) was included using the 2-4 line to assist in determining where we may expect wave 5 to end. The orange circle designates the anticipated target. This is approximately 1107. Price may also target the top channel, that is estimated at approximately 1130.

2. The red and blue Fib fan lines are both set at 78.6%. Perhaps price may find resistance here? Price is up against the blue fan now.

3. The blue Fib lines represent the length of wave i. Wave v=i at approximately 1105. This measures up to the red Fib fan.

That is all I have for now. It has been a long day at work. Tomorrow, I will be just as busy so I do not anticipate updating charts throughout the day.

GL.

2/25/10 - AM [8:30 AM Update]

[8:30 AM Update]


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SPX Preferred Count

SPX Preferred Count


Looks like a few H&S patterns may play out. As I stated last night, this most likely will confirm the count I have going, (ii) is most likely done.

I have updated my cash count as well. I have (ii) complete as of yesterday at 1106.41. We then started wave i down and ii up of (iii) near the close.

I needed to see what the minis did overnight to confirm it so that is my highest probability count so far and it actually makes sense.

Long Term Head and Shoulders

Just updating this chart as it has progressed along. Check here for the previous posts on this chart.

2/24/10 - SPX EOD [9:15 PM Update]

[9:15 PM Update]
If the minis hold over night, they may just confirm that minuette (ii) on SPX is complete.

A possible H&S is in the works. Let's see if that neckline and channel breaks.

Check back in 9 hours.
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[3:50 PM Update]

I forgot to mention two things below.

1. The purple descending trendline connects the 1150 high and the next lower high at 1111.85. Price is closely approaching it. If there is more room to the upside, let's see if she holds her back.

2. It is possible minuette (ii) ended at 1106.42 where I have it labeled wave b (black). Look how it touched almost perfectly the green Fib line, which makes c=a.

SPX Preferred Count

SPX 5 Min


SPX 1 Min

Not too exciting today. Price action is still within the thresholds of my preferred count. In fact, I believe it is close to wrapping up here.

By this count, I'm looking for wave c (red) of y (green) of (ii) to complete tomorrow. There are two possible options for this final wave. Either a simple 5 wave impulse up, of which three are complete.

The other option is that wave c (red) is forming an ending diagonal, of which three waves are complete or in the works.

There are two Fib markers of interest. One is in red the other in green.

The red Fib lines represent wave a (red) of y (green). wave c (red) = .618a(red) at 1106. The green Fib lines represent wave w (green). Wave y = w at 1106.

Of course the above Fib markers are just guidelines and the waves may do whatever they so please. We shall see.

My alternate count remains the same as well.

2/24/10 - SPX AM [9:50 AM Update]

[9:50 AM Update]
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Here's an updated count. So far only a 62% retracement and my wave c =1.618a in green to complete (ii) blue.

Let's see if she holds.

2/23/10 - SPX EOD

Preferred Count

Preferred Squiggles

Alternate

I just wanted to post an additional chart that shows the overall view of my preferred count. The squiggle and alternate counts were included here again.

2/23/10 - SPX Mid AM [2:15 PM EOD Update]

[2:15 PM EOD Update]
Here's a squiggle count off my preferred count from the 1112.42 top. If you recall, I started with this count last week. I don't think the Leading Diagonal pattern is legit but it still counts as an impulse wave anyway so it is a good 5 waves down.

I think the squiggles count well to justify the nested 1-2s at the top here, if not the larger nested 1-2s still work.
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[EOD Update](Preferred Count


Alternate Count

Looks like we saw a battle go on between the bulls and bears during the second half of the day. If appears the bears may have taking a slight advantage into the close There are two channels that were in play that I believe to be significant.

On the top chart, orange channel represents the EW channel for my w-x-y zigzag for minute [ii]. (review to the the bottom chart for the overall view. Note, though the waves are labeled as a and b, from an EW channel perspective it still means the same thing, just substitute the a and b with w and y). Price broke below the orange channel today and backtested it unsuccessfully. This happened twice. That should be bearish.

The next channel is the pink one, which represents a general channel for the entire move off the 1044.50 bottom. Again refer to the second chart for the overall view.

I believe this is the next line in the sand to determine were we head in the next few days. This should determine if we have one more push higher or consider minute [ii] complete at 1112.42.

I have a preferred count and an alternate count above. Within the preferred chart there are a few alternatives as well.

Below are my options ranked in order:

Option 1. The first impulse wave off the 1112.42 top is almost near completion. Green wave iii is almost complete, iv and v green should follow. A possible target may be 1085. This should complete minuette (i) of [iii] down.

Option 2. We are seeing a nested 1-2 count, which I have labeled in orange and red. A third wave down is next on tap and will break down through the pink trendline. The target here would be to fill the gap below at 1079.

Option 3. Based on the second chart above. The entire move down today completed wave iv and a fifth wave higher is expected. A target for wave v would be near the orange circle at approximately 1115.


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I wanna see that dashed pink line break
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The above chart is still my preferred count.


However, I do want to see price break below the dashed trendline (pink).

Using Elliott Wave For a Trade Setup

Last Friday there was a discussion in the CiL on the validity of EW's use for trading. Below I have posted an excerpt of a discussion (primarily my response and suggestion on how to use a current setup for a trade).

During that Friday, I noticed what I believed to be (at the time) a Leading Expanding Diagonal. Those who read my blog know that I posted on this pattern. It turned this was not the case, however, what EW provided was a case for a new impulse wave down or potentially a wave iv down.

This provided a clear setup for either the bull or bear camp. Below at 18:07 I provide an example on how to setup the trade.

It is clear, if you took a bearish stance and trade, it work out alright as of this morning (chart above)


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17:55


KungFu(Grand)a:
here's my EOD update:

http://waveprinciple.blogspot.com/2010/02/21910-eod-update.html

will be curious to see if the Leading Expanding Diagonal applies here.
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18:07


KungFu(Grand)a:
typically tanger it would be.

with EW it can be a wave 1 (down or up). but that is all relative to the count.

so in this particular case, it may be a wave 1 down if u take everything else into consideration (61.8% fib retrace, count the waves complete, hitting the 50 dma and etc. )

it will be very easy to determine what it is come monday whether this is a wave iv of wave i.

break below 1106 and i will call it a wave 1.

break above 1112 and it will be a wave 4.

so here would be a good example of a trade setup. if ur bullish, u could have gone long here and stopped at 1106.

if you were bearish, short and stop at 1112.

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2/23/10 - SPX AM Update

Preferred Count

It's getting close. I wanna see price break below the dashed-blue line and more importantly fill the gap below at 1079. This would confirm that the rally is over based on this a-b-c count.

The second chart is my preferred count at the moment. There is a battle for 1096.

2/22/10 - SPX EOD [10:10 PM PST Update]

[10:10 PM PST Update]

I start out by saying that my primary count has us in a new wave down to start [iii] unless 1112.42 is taken out.

There may be another way to count the rally off the 1044.50 low. I know other EW bloggers have this count as an a-b-c vs my double zz.

I went ahead and labeled this count on the above chart. Based on this count, we are in wave C, which is a 5 wave impulse. EW Channeling techniques are helpful in forecasting the levels for waves iv and v.

Here I have created a channel using the ends of wave i and iii and drew a line parallel to it using the end of wave ii. Based on this technique, wave iv generally will fall somewhere near or on the lower channel (this does not always happen but may serve as a rough guide).

The target for wave iv, if there is a wave iv, should be near 1102. Should wave iv fall on this lower trendline, we may use the current channel to forecast for wave v. Wave v typically will fall somewhere near the mid or upper channel line. In this case the mid channel line intersects with the green dotted line (this is the long term bear trendline). That may not be a bad area to end if this count is correct.

Just something else to think about.



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Well for now it's pretty straight forward. My bearish count has us in a nested 1-2 count. 1112.42 has not been taken out yet so Mr. Market hasn't proven to me that minute [ii] still has some gas left in her.

I'd like to see price break below that lower ascending trendline to confirm the leg up is over.

However, the alternate count sports a very legitimate wave iv flat, which implies a final wave v to new highs. If the alternate is the correct count, refer back to this chart as I posted over the weekend for some potential targets.

I'll post some more later but this is about all I have for now.

2/22/10 - SPX AM Update [8:30 AM Update]

[8:30 AM Update]
One way to count this. Looks like a small scale H&S in the works. It would target 1102.

Of course the alternate is a wave iv triangle/double three type structure in the works.



So far that impulse wave down from Friday's top is holding. It may be counted as a new wave i down or a, with today's pop a wave ii or b.

Projecting out with the Fibs, the likely targets are 1106 and 1103 for wave iii or c. For the bulls, this would mean a wave iv. For the bears, a break of the orange trendline near 1103 would need to be achieved to further their case.

2/22/10 - E-Mini AM Update

Looks like several trendlines converge here along with the center EW channel (red dotted) at approximately 1117.

2/20/10 - SPX 1121 Anyone? [1:00 PM PST Update]

[1:00 PM PST Update]

I added two long term trendlines (green and red). I think the green one is another target if we did not complete on [ii] on Friday. There is a range between 1117 - 1120 between the green trendline and the red ascending trendline.

1121 makes for a nice 50% retracement from the Oct 2007 high thru Mar 2009 low.





A Chart For Da Bulls

What do you think? Close enough?

If she has enough juice left to push higher, this may be a strong stopping point. However, the last chart is something to keep in mind if the bulls have something else up their sleeve.

Until then, this is my count. And regarding that Leading Expanding diagonal, Columbia1 of EW Trends and Charts kindly pointed out that wave 5 must be longer than wave 3. In this case it is not so it is most likely not a LED. However, the structure counts well as a 5 wave impulse down so it still qualifies as a potential wave 1 or it could just be wave a of another a-b-c correction.

2/19/10 - EOD Update [10:40 PM PST Update]

[10:40 PM PST Update]

This FreeStockCharts tool is pretty sweet! Was playing around with it tonight and decided to chart the move off today's top.

I'm really thinking this is a pretty good Leading Expanding Diagonal. Read below for what the implications are for this pattern.

But even if this is true, I'm not sure how significant it is considering the degree (low) of the wave. If it were a larger wave, I would take that as very bearish.

Looking forward to what next week has in store for us.



Leading Expanding Diagonal?



Are we there yet? Apparently not or maybe.

I made some adjustments to the wave labels and to be honest, waves iii and iv black are sort of eye-balled. I am going to label today's high at 1112.42 as the minute [ii] top for now and let Mr. Market prove to me otherwise come Monday.

One interesting wave structure to note is the one off the top. I think it may qualify as a Leading Expanding Diagonal.

Per EWP (Pg 40), "This form appears to occur primarily at the start of declines in the stock market."

"A leading diagonal in the wave one position is typically followed by a deep retracement".

So on the second chart, price quickly retraced almost 78.6%. I do show that wave ii after the LED may have only completed wave a and b before a final c up to complete.

The alternate to this of course is that it is just another expanding triangle of another wave iv.

The last chart is an update of the Fib confluence. It appears all other trendlines and fans are still being respected except for the arc.

I'll post more over the weekend. Have a good one.

2/19/10 - AM Update : E-mini

CPI and Core CPI numbers are better than expected. Futures are responding accordingly.

So far, a pretty good EW structure. The big question is it the beginning of [iii] down or yet another correction lower.

Stay tuned...

2/18/10 - SPX EOD Update [10:00 PM PST Update]

[10:00 PM PST Update]



Just some cool charts to highlight some Fibonacci tools and a confluence at 61.8.

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[9:30 PM PST Update]Primary Count

I just wanted to re-post this chart at the top here. I mentioned the other night that price was heading back to re-test the long term bear trendline.

Upon further review of my chart, I notice my trendline was off just a tad bit. I made the correct adjustments and low and behold, price kissed it today along with other significant levels.

So I post the following reasons for a minute [ii] top below:


1. THE WAVE COUNTS LOOK COMPLETE

2. FIB RATIO OF v=.618i

3. WAVE y HIT THE TOP OF THE EW CHANNEL AS PROJECTED FROM THE w-x LINE

4. PRICE KISSES AND IS RESISTED BY THE LONG TERM BEAR TRENDLINE

5. FUTURES INDICATING A LARGE DROP AT THE OPEN IF IT HOLDS OVERNIGHT

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[8:45 PM PST Update]

Here's a more bearish view on the e-mini.

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[7:45 PM PST Update]
E-mini is down 12 pts and change now. Looks like a possible wave 5 Ending Diagonal for this first impulse down.

Apparently Asia is red all over. HK is down over 400 pts (2.25%) and Japan is down 1%.



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[3:30 PM PST]SPX 1 Min

E-Mini
E-mini is sporting a very nice looking impulsive wave down. This was a result of the surprise move by the Feds to raise the discount rate by .25% to .75%.

Looks like the first chart below is going to be the count to go with for now. I know it's long time between now and tomorrow, but I'm pretty sure this is going to hold.

If so, it should open with a iii (black) down. Refer to the 1 Min SPX chart above.

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Still looking for a wave 5 Ending Diagonal. I think that would be fitting for this counter trend rally.

Above are the two counts I'm looking at right now. I'll take a closer look later and make the usual updates.

Gotta run for now.