12/22/11 - EOD Update - Golden Cross Watch and Inverted Head and Shoulders [10:55 PM Update]

[10:55 PM Update]

SPX - 15 Min - Option 2

This is a follow up to my earlier post under the 30 min Primary chart. This assumes that the market is working towards five waves up and that wave 3 completed today.

If this is the case, I  will be looking for a wave 4 pullback towards the 1247 level. From there, wave 5 = 3 at 1273 and 5=.618*1 at 1273 as well.

This is a speculative count at the moment.


EOD Update
I'm pretty satisfied with today's action based on last night's post. Today's post is going to seem a little bullish biased but I think there are things lining up that may justify it. However, the major caveat as I have previously mentioned, is that the bulls need to break through the descending trendline connecting the 7/7 and 10/27 highs and ultimately take out 1292.

With today's move and close over 1250, I believe there is a good chance that the market will attempt to challenge 1292 over the next week and/or possibly into the first week of January 2012.

Near term, the market may have a little weakness (or maybe more depending how the VIX is interpreted) but I believe the dip can be bought per the primary count I am currently tracking.

**Note: I'm not sure if all the multiple alternates I post confuse readers here. Please keep in mind that the primary will always be the count I focus on until it is ruled invalid. 


Readers should also keep in mind that if an alternate count(s) point in the same direction as the primary, then it only helps to confirm which side of the trade to be on.  

SPX - 5 Min - Primary

Here's the breakdown at the 5 min level. I believe that wave 1 grey of 3 blue completed today at 1255.22 and that wave 2 grey started.

SPX - 30 Min - Primary

The 30 min MACD ended the day with a sell signal so this may fall in line with a pullback for wave  2 grey of 3 blue.

Please read the note on the chart. I believe there may be a chance that the entire wave up from the 12/19 low may be working five waves up versus a nested 1-2 1-2. I did not add the alternate labels so as not to clutter the chart. Should the market spike briefly at the open tomorrow and then pullback and hold between the 1245-1250 level, I will make the adjustment.

SPX - 5 Min - Alternate Extended 3 Count

This alternate count views the wave off wave 2 blue as an extended wave 3. Per the count, this would only complete wave 1 grey of 3 blue near 1259, which would then be followed by wave 2 grey.

But, as noted above on the 30 min primary count, this may be all of wave 3 blue once complete. If so, this should wrap up early tomorrow at 1259 and then be followed by a wave 4 blue pullback that consolidates for the remainder of the trading day.

SPX - Daily - Bullish Triangle Alternate

Just another view that supports higher prices ahead.

SPX - Daily 50 / 200 SMA

The title of today's post. This daily chart just looks fairly bullish to me, especially when considering my bullish counts.

1. There is a MACD buy signal today that will require confirmation tomorrow.
2. The 50 day SMA is rising fast towards the 200 day SMA.
3. This will be the market's 4th attempt at the 200 day SMA and per Gann's rule of 4, the market just may break through.

SPX - Daily

I haven't really seen anyone talking about the inverted head and shoulders as much lately other than Pug. Let's not forget this especially as the 7/7 - 10/27 TL is crucial for the bulls to break through.

If it plays out, I show a target of approximately 1380, basically challenging the July high.

SPX - Daily 

I just had to post this since I love it when these quirky observations play out. I brought this up on Tues. 

SPX - Daily - Bearish Triangle Alternate

As I mentioned above, the bulls aren't out of the woods yet. This bearish triangle option must not be ignored.

However, I did mention yesterday that a daily MACD cross would begin to weaken this scenario.

VIX- Daily

The VIX found support today on the descending trendline and at the 6/6/11 high. The candlestick resembles a hammer as well so this may be lining up with the wave 2 pullback for SPX or the thrust down out of the bearish triangle.

Weekend Thoughts [3:50 PM Update]

[3:50 PM Update]

I updated the the 2008 analogy below for the bear case and added some comments.

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Check back throughout the weekend as I will add commentary on the charts and working on an additional chart to add to the bear case. I will probably re-arrange the charts below as well but wanted to put then out there for now.

Since last week's Weekend Thoughts update the bull case continues to strengthen.

THE BULL CASE

Weekly 'W' Bottom

I would say this has been confirmed. Eyeing the upper band.

3- Push Pattern

I have made some adjustments to the target for 1 and 2 mainly based on the channel trendlines.

13 EMA - 80 SMA Weekly

Lots of cross ups.

Long Term Channels

LT Corrective Option

 Even this corrective count option provides for new highs.

Fibonacci Targets

THE BEAR CASE

2008 Repeat?

I updated this chart. There may be problems with this analogy for 2008.

During the 2008 backtest of the 50 week SMA, MACD had crossed up well before the backtest and the histograms began to diverge right at the backtest.

Compare that to today and you now have price closing over the 50 week and the buy signal confirming this week. So this comparison may not be as similar as initially thought.

This essentially weakens the bear case and if anything, weakens the analogy.

50 / 200 Month SMA

Again, this chart is 50/50 and may start to favor the bulls as the MACD histos may start to trend higher.

Weekend Thoughts

I will be presenting several charts supporting both the bullish and bearish case. This is a work in progress over the weekend so check back later for more charts, especially the bearish one (assuming I can find more!)

THE BULL CASE

2010 Replay v2

Added the 200 day SMA. Perhaps that is where leg A completes first. 

2010 Replay?

The labels are not wave labels but used for reference. So the question remains is the market working on completing leg A and then a pullback B to come? Or has the market completed the MA backtest  at C and is set to trend higher?

The former scenario would make sense to form a better proportioned inverted head and shoulders bottom. Let's see what plays out.

So though this may favor a bearish view near term, it has a longer term bullish view and until a cross down occurs, it should remain as a bullish view.

 One thing to note is that it would be obvious to expect a pullback to form a right shoulder of an inverted head and shoulders pattern so perhaps the market does not give one a chance to get in on the ride.

10 Year - Fibonacci

Interesting how the market has respected the various Fibonacci levels through out the 2008 decline and from the 2009 rally. Perhaps a re-test of 1370 is in store should 1228 hold.

The weekly MACD buy signal that trigger at the end of the week may be alluding to this move.

3 Push Pattern?

Weekly 'W' Bottom?

A MACD buy signal and a close above the 20 week SMA. To confirm the next week or two should see a decent sized rally.

NYA Breadth Thrust

Refer back to this post for an explanation on this.

Weekly 13 EMA and 80 SMA

The market cleared both.

Fibonacci Fans

The market finally cleared the 61.8% yellow Fib Fan.
THE BEAR CASE

2008 Replay?

50/200 MONTHLY SMA

The MACD LT TL squashed the latest rally so far and remains in a confirmed sell signal. However, for a bullish argument, price backtested the blue TL and bounced very rapidly.

Will need to keep an eye on the MACD TL. If it breaks up and through,  this chart will be placed on the bull side.

3-Push 

This is a near term view so not necessarily bearish on the longer term.

EOD Update [11:05 PM Update - McClellan Breath Thrust]

[11:05 PM Update - McClellan Breath Thrust]

Is an extended advance in store for the stock market? From Stockcharts.com

Breadth Thrusts

A breadth thrust occurs when the McClellan Oscillator surges from deep negative readings to strong positive readings. Typically, the indicator will move from below -50 and exceed +50 for a +100 point thrust. A breadth thrust signals a surge in bullish breadth that can lead to an extended advance. Not all breadth thrusts foreshadow extended advances, but most important lows are marked by a sharp surge in breadth. A breadth thrust is enhanced when preceded by a bullish divergence. 

The next chart shows the McClellan Oscillator foreshadowing a bottom in February. The McClellan Oscillator hit its low in late January, but the NY Composite moved to a new low in early February. With the McClellan Oscillator forming a higher low, a bullish divergence formed ahead of the breadth thrust. The bullish divergence warned of a possible trend reversal and the breadth thrust from -70 to +50 (+120) confirmed the reversal. The McClellan Oscillator peaked in early March and formed a bearish divergence, but the NY Composite continued higher into mid April.

From StockCharts.com

Now take a look at the current NYA below. A positive divergence followed by a breadth thrust near what should be considered a significant bottom.

NYA

EOD Update

Late day for me today so this will be short. The past view days I have been counting squiggles trying to figure out end of this first wave up. Many things lined up today to indicate to me that there is a pretty good chance this occurred at 1220, which falls within the range that I was looking for.

The 15 and 30 min MACD are sporting -ve divergences as well.

Should wave 2 down have started today, I'll be watching the 50 day SMA at 1174 and then the 20 day SMA at 1166.

15 Min

For the most part I can account for all waves and with the late day reversal breaking through the trendline, there is a good chance this is complete.

Notice I do have an alternate thought, being that this may still have only completed wave 3. If this alternate plays out, I would expect wave 4 to drop no lower than 1190, which is the previous subwave 4.

RUT - 15 min

RUT counts as an impulse wave that looks like a diagonal.

VIX- Daily

I was watching for VIX to hit 30 just like it did the previous two times after breaking below it's 20 day SMA. The equity buy signal obviously worked this time.

VIX - 15 min

The VIX sports a nice clean five waves down with the bounce late in the day along with the 15 min +ve MACD divergence. Let's see if it has any legs.