5/19/10 - SPX EOD [8:56 PM PST Update : EUR/USD]

Another one of those whipsaw days. These waves continue to look overlapping to me, which makes me automatically think of 3 wave structures.

Above I have put together a bull and bear count, which I think works well. Both are implying the same thing, A little more downside to come and then a sharp bounce is in store. How high that bounce goes will detemine if the bears are in charge or if the bulls are.

I interpret the structure off the 5/13 top as a possible ending diagonal. The waves down just do not look like clean impulse waves to me. The structure itself is starting to wedge and also appear to take on a 3-wave pattern. This is very indicative of a potential ending diagonal pattern, especially because it fits both the bear and bull counts. You see a 5th wave or a final wave in a zigzag (a double in this case) may end with an ending diagonal.

The other option here is that the move off the top at 5/13 may just be a double zizag. I have a few options for that as well but will address that later should the pattern play out.

That is all for now. I'll probably post more charts later.

  

[6:15 PM PST Update : E-Mini Diamond Pattern]

Hmmm. A second time a charm? This looks a little more proportional this time. So far it found support near the lower trend channel as well and consolidating around the gap.

As the chart above indicates, the market dropped to it's 200 day SMA and bounced from there as expected and resulted in a hammer at the close. Let's see if there is a positive confirmation tomorrow. There are some overhangs above that will provide resistance. The 21 and 34 EMAs have certainly curled over so the trend is currently down near term. How much longer is the question. Don't forget, we got the same action back in February only to see the market march back up to new highs.

As I mentioned a few weeks ago, I'm watching the 50 and 200 day SMA before I switch on full bear. Until then this has been a good market to trade.

This count is also still progressing along. Posting updates everyday until it doesn't work anymore so keep an eye on it.

[8:56 PM PST Update : EUR/USD]

The Euro looks like it may have complete an impulse down and working on a correction back towards the neckline above. Click here for a larger view.