12/5/11- Mc Clellan Breadth Thrust #2

Daily

I just wanted to point out that SPX has now put in a second Mc Clellan Breadth Thrust. To read about the first one, click here.

EOD Update [9:52 PM Update - MCCLELLAN BREADTH THRUST]

[9:52 PM Update - MCCLELLAN BREADTH THRUST]

McClellan Oscillator

I previously wrote about the McClellan Breadth thrust here on October 12. The SPX went onto rally from there.

I'm referring back to this now because in the stockcharts.com example, the NYA continued to advance higher even though the McClellan Oscillator continued to diverge after the thrust. I figure if something similar is occurring here, then perhaps SPX will make one more stab higher to form a divergence. We'll see.


[9:26 PM Update - DX]

DX

Either the dollar completed wave (C) or only wave 1 of (C). The hourly MACD sports a negative divergence though so either (C) is complete or a wave 2 of (C) should be on tap.

ES

So far ES is finding support where c=.618*a. There is also an hourly MACD buy signal too.

EOD Update

This is going to be a quick update again. No time tonight. I'll try to add more in the pre-market tomorrow.

The bears came back to life today and recharged the alternate 3 count. A daily MACD sell signal was put in today as well as a close below the 20 day SMA.

If the bulls want it back, they are gonna need to buy it up tomorrow or the bears just may have a gap and crap down to start the day. .

Primary

For the primary, looking for the completion of wave X which I believe was pretty much done at the close. There is room for a little further down so we'll see in the AM.

Alternate 1

Should this count pan out, I believe wave e of B/X triangle has completed. This version of the count will be ruled out once the market drops below wave c.

Alternate 2

This is the uber bullish count and it to may be on the verge of invalidation. I show a wave 1 leading diagonal off the 11/1 low and today's sell off as part or all of wave 2 down. Wave 2s out of diagonals typically retrace 78.6%. It is pretty much there now so let's see if it reverses tomorrow.

Alternate 3

And last but not least the revived bear count. This count may have a gap and go drop tomorrow for wave iii down below the neckline. If this happens, coupled with a confirmed daily MACD sell signal, watch out below.

The market may be revisiting the mid 1100s again shortly.

Daily Bollinger Bands

Showing the close below the 20 day SMA, the MACD sell signal and TL support.

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.

Weekend Thoughts [10:50 PM Update NDX]

[10:50 PM Update NDX]

Another fiver.

[3:41 PM Update Copper]

HG

I hadn't looked at copper in a while but with PMs splashed all over the headlines, I figured I take a look.

I think this is a pretty decent looking count and it wasn't a struggle to count at all. Seriously it took me literally 2 mins from the sec I pulled up this 5 year chart. The waves were so discernible and  I mean this is the type of wave structure I'm sure R.N. Elliott himself would have said, "Aha! That's an impulse wave up!".

If this is correct, this may even corroborate my bullish SPX count below.

Weekend Thoughts

Based on the charts below I'm expecting a bounce towards the 1165-1175 area over the next week or two.

The Bigger Picture

Here's the bigger picture I've been tracking for some time now. As you can see, there are several ways to count this wave structure off the 2009 low. This is why I continue to stress that for near term wave counting it is better to focus on three waves at a time, whether it be counting 1-2-3, a-b-c or w-x-y.

Until a clearly defined 4th (without overlapping into wave 1) and 5th wave are put in, anything is possible.

So why bother making a case for a super duper bearish Primary wave 3 down? For all we know it could just be a wave C or X of the same degree. Show me waves 1 and 2 or A and B down first.

Anyway back to the count at hand. At the moment I'm thinking my red count option is starting to show true potential here. As you can see below, I'm beginning to speculate a potential ED for wave C yellow.

This is early but would fit with behavior if the market is looking to find a bottom in the 1100-1000 range. Keep in mind wave C should be an impulse wave and just make five clean waves down to the levels. But again, an ED would seem more appropriate as the bulls and bears battle it out to the bottom in an overlapping fashion.

Red Count

I'm favoring this count at the moment but still watching blue for sure. Both still are expected to move in the same general directions. Its more a matter of how they do it and how high.

For the most part each count should generally keep us on the right side.

Blue Count

Trading Range

SPX remains in the 1220 - 1120 trading range. The market found support at the lower end of the range and may be setting up for a bounce as evidenced by the charts below and the counts above.

SPX - McClellan

Throughout the trading range, the market bounced to the high end of the range every time the McClellan Oscillator ticked  higher, even without diverging with price. One difference this time around though is the daily MACD sell signal, so we'll have to see if this pattern continues.

Though I haven't highlighted it on the chart, this also worked for the pullbacks as well. In fact that just occurred last week on 9/16.

NYA - McClellan

NYA, however, does show a clear positive divergence with price.

NYA - McClellan Closeup

Positive divergence on two levels so I believe the bounce for SPX to 1165-1175 is not unreasonable.