SPX EOD UPDATE

Whew! So the indexes lost 8% for the month. The bulls and bears continue to struggle for a direction and the counts reflect that.

1. SPX - DAILY PREFERRED 

So where do I begin? I've added my daily preferred count, which I have not done for some time. I still show Minor B as complete, but as you will see in the charts to follow, that may be questionable.

 

2. SPX - 60 MIN PREFERRED 

As far as the 60 min chart goes, I had to make some adjustments to the near term counts. Yesterday I labeled the waves as a series of nested 1-2s but changed it to a potential leading diagonal (potentially an ED as shown below) to complete minute [i] up of Minor C. 

With the 60 min MACD nearing a bear cross, this sets up nicely for a minute [ii] down.

3. SPX - 5/28/10 - COMPARE TO CHART 4 BELOW


4.  SPX - AUGUST 2007

I continue to post charts 3 and 4, which  compares the current day structure with Aug-Oct of 2007. The similarities continue to remain and I think it behooves us to continue to monitor this for any clues as to where we may be heading. 

One recent observation I have made is that after the Aug 2007 low, within 4 trading days the market crossed back over the 200 day SMA. Flash forward to today and notice that we have had 3 trading days since the most recent low. Will we see the market back over the 200 day SMA on the first day of trading in June?

That could happen if bullish Mondays (Tuesday in this case) continue then again we have had 2 red consecutive Mondays the past two weeks. 

5.  SPX -TREND

 Chart 5 is a comparison of the Feb lows with the current structure. Once again there are some similarities with the rally off the Feb lows. 

The RSI looks like it double bottomed and has a lot of room to run to the upside. The daily MACD histograms continue to slope in a positive direction and a bull cross appears to be imminent. 

6. SPX - OPTIONAL COUNT

 

Here is an optional count that came to light today as I was trying to figure how the wedge formation off the 1040 low would fit into the structure since the 1219.80 high. We'll here it is.

 

This formation may also be counted as a potential ending diagonal for minuette (b). 

Notice the following Fibonacci confluence at 1020:

 

[y]=[w]

(c) of [y] = .618*(a) of [y]

This would be the alternate option to my minute B for my daily preferred count.

 7. SPX -INVERTED HEAD AND SHOULDERS OPTION

The inverted head and shoulders should be self explanatory. This formation looks a little more balanced compared to the previous one everyone had pointed out. The main clue that the previous one was most likely a no go was the lack of volume at the neckline breakout. Let's see if this one plays out.

8. SPX - 60 MIN BEAR

Last but not least is the bear count. The nested 1-2 setup looks just about complete. We completed a double zigzag for minuette (ii), which retraced minuette (i) by nearly 50%. The retracement is an adequate one and the structure looks complete. 

I picked up puts for a trade into the close for the following reasons:

1. The bear and bull counts indicate the leg up may have come to an end.

2. The 60 min macd was indicating a turn was near

3. One more failed attempt to close over the 200 day SMA

4. The puts were discounted by 40%.

Alrighty. That is all for the week. Enjoy the weekend and please thank a Veteran for their service!

5/28/10 - SPX 5 MIN Update [9:20 AM PST UPDATE- Possible Wedge]

[9:20 AM PST UPDATE- Possible Wedge]

Sorry. Been busy in the CiL posting these updates, I forgot to post them on the blog. This is another high probability setup occurring,.

Here's a 5 min look of that ED.

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Just wanted to update the 5 min chart to include the Alt (y) wave, which would equate to minuette (ii) of minute [iii] of my bear count.

5/27/10 - EW TRADE EXAMPLE (THIS IS FOR YOU SCW)

Just a friendly reminder to all. Information on this blog is for informational and educational purposes only. In no way is this to be taken as investment or trading advice. All due diligence is the responsibilty of the reader. 

Below is a post from SCW in the CiL (CoverItLive Chatroom- see link to the right) :

[Comment From scwscw: ]  hey grand, if you mind me asking, when did you place your long trade? just trying to see how you turn your charts into cash (i know you like c's and 3's, but not certain where you would have put on this long-- assuming on open this am since the original down yest looked like it had 5 waves?). we have a lot of great traders in the CiL, just trying to pick up some good habits....

SCW, my apology in advance. I'm going to provide a lengthier explanation in case there are others who may not have as much EW experience as you do and may be interested in this.

As you know, I trade primarily waves 3s and Cs. I think this is the best setup while using EW to trade as you'll see below.

I will start off with, I took a long position just about into the close (about 5-10 mins) and positioned myself with Jun SSO 37 (striking) calls. I paid $1.10 for those calls.

Why you may ask on those calls? That's a whole differnt blog post. To keep it simple, I focused on 37 since there was an open gap at that level and I had been watching the preminum trade. It sucked out pretty quick into the close.

Once we bounced off 1044, whether I used a bear or bull count, I was expecting the first wave structure up to travel in 5 waves at subminuette degree (my red lower case #s and letters).

In my chart above,  notice how I labeled the subminuette waves in red. I have both a motive count (i, ii, iii, iv, v) and a corrective count (a, b, c, w, x) , which both work.

Yesterday, after counting up to wave iii or c, we were all looking / expecting  a wave iv down. However, as the selling continued, the pullback kept dropping lower, which increased the odds that we were not looking at a wave iv though it technically did not violate an EW rule (the 4-1 wave overlap).

Obviously keeping the corrective/bear count in mind, I believed it could also be an (x) wave. But I also noticed what I believed to be a truncated (v) ending diagonal. This helped me get around the possible 5 waves down of the end of (iii) as you had asked.  So using that truncated (v) the structure down after that could be counted as an a-b-c to form (ii).

So say I was wrong about the impulsive count (i, ii, iii, iv, v), the corrective count (Alt:w and Alt:x) still applied. And what did both counts imply?

The impulsive count was implying a wave (iii) up was in store and at the minimum a wave (y) for the corrective option

Both essentially are 3rd waves up. My timing happened to be pretty darn good into the close.

I have been early? Certainly! It's pretty hard to nail the turn though. 


In today's example it worked out well. I took that trade off into the close for a very nice profit. I may miss out on a possible gap up tomorrow, as posted in my EOD update, but knowing that we closed below the 200 day SMA and again with the handsome profit, I wasn't going to get greedy.


If and/or when we break over the 200 day SMA, I'll look for a backtest of the MA and depending on the wave count, may go long or I may go short (pick up puts). It's all going to depend.

Notice that this trade worked whether one is a bull or a bear?

I hope this was helpful and just one person's opinion. Please feel free to leave a comment if you have any questions or suggestions on how I could have done it better or just your thoughts.

Thanks for reading.

5/27/10 - SPX EOD - HAMMER TIME [5:08 PM PST Update: 5 MIN CHART]

[5:08 PM PST Update: 5 MIN CHART]

SPX - 5 MIN  

Here is a 5 min chart for your viewing pleasure. This main count supports the bull view. The alternate count in gray supports the bear view.

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What a day. The bull and bear counts are still in play, though I will say at this point, the bulls are starting to gain some traction.

The market tried to get over the 200 day SMA but closed just underneath but did close on it's high.

Remember, I'm still waiting for a death cross before I say our super duper bearish move is here. Frankly, on a longer term view, I don't know if there is a Primary wave 3 down. There are other bearish counts out there that point to lower lows but is not considered a Primary 3 wave so we'll have to see.

That is just getting way ahead. Until then, I'm going to try and remain as open as possible, to the dismay of many bears on the CiL.


For those who are not aware or may have forgotten, please refer to the link of my preferred daily count to the right for my overall view at the moment.



As for the current counts, let's start with the bull count.

SPX - 60 MIN PREFERRED BULL

After hovering around the neckline for most of the day, the market decided to climb higher and for once made a higher high since about a week ago. The inverted head and shoulders neckline was breached.

Will it follow through to the target of 1140? We'll have to see.

As I posted the past few days, I continued to focus on the MACD and RSI positive divergence as a guide for more upside to come. That so far has followed through.

The RSI also broke out of a downtrend line and successfully backtested it with a bounce off the old trendline.

As for the wave count, the main count shows that we completed minuettes (i) and (ii) off the 1040 bottom. We were working on subminuette iii of minuette (iii) into the close. So if this count is correct, we may gap up over the 200 SMA tomorrow.

The alternative to this bull count is that we are completing minuette (i) and that may wrap up soon, so there may be a headfake over the 200 SMA and then a pullback for minuette (ii).

I will try to post a 5 minute chart later highlighting the possible alternate count.

SPX - 60 MIN BEAR

As for the bear count, I made some adjustments to the overall count and am now going with the nested 1-2 approach. This has not really been successful lately but it looks like the best option at the moment. 

I have us working on a double zigzag for minuette (ii). Once again, notice that since the minute [ii] top at 1173.57, the bear and bull counts are pretty much the same structurally so the bears and bulls can trade this pattern no matter which side you are on.

I have mentioned that now is the time where we start to diverge and will know shortly which count is truly in play. 

A move back over 1173.57 will void this bear count and frankly create a complete recount for the bears. My bull count has not changed for quite some time now.

SPX - AUGUST 2007 

I keep coming back to these two charts above and below. The comparison with Aug 2007 and the current period is drawing some major similarities. So far this is what is keeping me more bullish than bearish.


Look at the behaviour of the RSI, the wave structure, candlesticks, the relationship of price to the 200 MA and the relationship of the 50 MA to the 200 MA.

If this comparison plays out, it would fit my preferred daily count perfectly, which is calling for one last minor wave C higher. See daily count here.

I dunno know, does it repeat? Who knows but the behaviour by far is somewhat compelling. I will continue to post these charts until the comparison can no longer be made.

SPX - DAILY 5/27/10

Lastly, the charts below are self explanatory.

SPX - WEEKLY HAMMER TIME?

SPX - DAILY BOLLINGER BANDS

Check back later for more...

5/27/10 - E-MINI AM Update

Hmm...Looks like a nice big push is in store.

5/26/10 - SPX EOD and E-MINI Update

SPX - 60 MIN PREFERRED

SPX - E-MINI

 SPX MACD AND RSI DIVERGENCE

Not much to update tonight. It appears an impulse wave up has completed. I have labeled it minuette (i) of minute [i] of minor C. A pullback followed as expected and I believe is part of minuette (ii). 

So far the minis are up nicely for now (13 pts as I type this). I have an inverse head and shoulders pattern developing on the minis which also applies to the cash markets. 

The minis' wave 2 pulled back and retested the upper channel of the previous wave down and has so far bounced.  The cash has not done so just quite yet but most likely will at the open tomorrow or maybe it won't and start out with a wave 3 up. 

The inverse h/s target for cash is approximately 1140 and interestingly enough, a wave 3 or c up would approximately equal 1.618 *1 or a at 1140. 

For the bear count, I have this as a wave 2 up and the targets would still be the same since it would require a three wave correction up consisting of an a-b-c. 

I'm still watching the 60 min MACD and RSI divergence. RSI also backtested it's trendline break. We'll see if there is any follow through.

That is all for now. I'm tired. It was long day. Remember to just keep an eye on both counts. They are still working on valid structures in the same direction. 

GL!

5/26/10 - E-Mini and Oct 2007 Revisited

SPX - 5/25/10

SPX - 8/07

5/25/10 -SPX EOD

SPX - 60 MIN BULL PREFERRED

SPX - 60 MIN PREFERRED W/ MACD DIVERGENCE

SPX - 60 MIN BEAR

Where's the crash? It is nice sometimes to see wave counts play out the way one expects. 

Last night I posted a series of E-mini charts showing the large drop that followed through this AM on the cash markets. We got what we were looking for, at least for now. 

Many of us were looking for a final 5th down today. It appears as if we may not have seen one, but I think 5 may have truncated as an ending diagonal. I'll post a 5 minute chart later highlighting this.

Admittedly, my Fib projections were a tad off but the EW channels provided some guidance as where we should expect minuette (v). 

Based on my preferred count, Minor B is most likely complete and we should now work towards a final Minor C wave higher. We should be looking for 5 waves up. It may be a straight up impulse or an Ending Diagonal. Both consists of five waves. 

On the second chart notice the 60 min macd positive divergence. I had been pushing this in the CiL and posted this the other day. It turns out we had a double positive divergence. 

As for the bear, we also saw possibly the completing of minute [v] to end Minor 1. Now a sharp retrace for Minor 2 should be in progress. 

Maradona from the CiL pointed out in comments on yesterday's post that price touched a low equivalent to 5.7% below the 200 SMA, similar to the drop back in Aug 2007 (Thanks for correcting me again Maradona!). See this post on that. Mara, thanks for the heads up. I'll take a look at that chart again.

Check back later for more charts.

5/24/10 - SPX EOD [11:40 PM PST Update]

[11:40 PM PST Update]

I posted these charts  last week. I like how the eur backtested the larger neckline and hit the target zone as anticipated last week. Wow. .88? Really? We're gonna have to see...


[11:22 PM PST Update]

Looks like the minis are going to hit their H/S target. I don't have it labeled on the chart but this would be equivalent to cash's wave 5. The black horizontal line on the chart is 1034 (cash equivalent 1044.50). That would work out nicely for a wave 5 target to arrive at the lower channel. We'll see.


[3:20 PM PST Update]

There is still a 60 min macd positive divergence. Looking for the minuette (v) down and then a bounce.

SPX - 60 MIN PREFERRED

SPX - 60 MIN BEAR

The bears are still in control at this point in time. It appears that minuete (iv) completed finally today as anticipated and it appears minuette (v) began into the close.

I drew new (ii)-(iv) EW channels for some potential (v) targets. We may be looking at the mid-channel or the lower channel.

Once (v) completes, we can mark that as either the end of minute [c], if using the bull count, or minute [v] of the bear count. The alternative bear count is the completion of the second wave 1 down of a nested 1-2 off the 1219 high.

We shall see...

5/23/10 - SPX E-Mini and EUR/USD PM Update

E-mini appears to be working on what counts best as a zigzag. Wave A up looks like a 3-wave structure. Wave B looks like a triangle and a thrust targets approximately 1110.

The Euro looks like it's working on a 1-2, 1-2 setup. A possible wave iii may target approximately 1.30 if it equals 1.618 * i.

We'll see in the am what we get.

5/22/10 - A COMPARISON TO OCT 2007

SPX - OCT 2007

SPX - PRESENT

I continue to ask the Primary Wave 3 proponents why not wait for a 50/200 day MA death cross before truly getting married to the idea that we are in Primary Wave 3, assuming this even exists. Remember Y2K?  :)

As a side note, here is a link to 10 failed doomsday predictions. Google for  more of course. 

Anyway, there are still valid bull and bear counts that apply so one should certainly remain cautious.

No doubt the near term trend is down but for how much longer? I continue to mention the 50/200 day MA death cross because as is evident in the top chart, it signaled the larger change in trend. 

On the same top chart, notice where the 50/200 cross occurred. The market backtested that cross, which appears to be consistent with a wave 2 retrace prior to a wave 3 down.

But prior to that, take a look at the structure before to the Oct 2007 top. It looks eerily famliar does it not? The index sold off almost 6% below the 200 MA only to rebound to new highs. The RSI print also looks similar to what we are seeing today. 

So fast forward to the present. We are currently looking at a very similar situation with where price stands in relation to the 200 MA as well as the low RSI print of 30.17. The low print was approximately 4.2% below the 200 MA.

Notice that the 50 MA is only starting to slope/curl down while the 200 MA is still rising. It did that in 07 as well as price was climbing to a new high. 

Look at the 3 wave structure I continue to point out with the orange lines. That is all it is at the moment, three waves down. 

Will all this mean anything? Perhaps not, but just throwing caution to the bears as I play devil's advocate. 

My preferred count still calls for a Minor Wave C up once Minor B is complete but also mindful of the bear count.

Let's see what the next few weeks bring.

5/22/10 - CHARTS TO PONDER

SPX - 60 MIN POSITIVE DIVERGENCE

 

 VIX - BEARISH ENGULFING CANDLE

SPX - TRIANGLE 4 OPTION

SPX - TRENDLINE

SPX - THREE WAVES

SPX - DOUBLE BOTTOM?

5/21/10 - SPX EOD [4:45 PM PST Update: Alternate Counts]

[4:45 PM PST Update: Alternate Counts][4:45 PM PST Update: Alternate Counts]

Check out my alternate counts page. I will continue to update other counts I have in mind here.

Click here.

SPX - BULL COUNT

Clearly the near term trend is down as the MAs are curling over in a steep fashion and the market closed under its 200 day SMA.

However, here is an update to the bull count I posted last night. So far so good. Notice the near perfect Fibonacci ratio (1.618) between wave (iii)/(c)  to (i) / (a).

Into the close, it appears we had minuette (iv) in the works and possibly near completion. The structure for the minuette waves channels nicely. (iv) may need some more work.

The bear count obviously still applies.

 SPX - BEAR COUNT

As I previously stated, this leg down works for both the bear and the bull count. Next week, I expect the completion of (iv) early on in the morning and then a final (v) wave down to complete this leg down.

The bounce that follows should be telling.

I'm working on a count that may have this leg down complete. Check back later over the weekend.

5/21/10 - SPX E-mini [9:18 AM PST Update]

[9:18 AM PST Update]

60 MIN MACD POSITIVE DIVERGENCE

[8:50 AM PST Update]

SPX - BULL OPTION 

Like I have been saying, something to keep in mind as well as that green trendline. 

Looks pretty red...