11/18/10 EOD Update -

EOD Update

And then there were two. Of the three options I presented in yesterday's EOD Update, only two remain with some sub options.

It appears we got that wave [C] as anticipated today. Though I was looking for an initial 1.618 expansion ratio for [C] to [A] we actually got a near perfect 2.618 extension, which is also a common extension ratio.

5 Min

Here's a 5 min interval that should cover options 1 and 2.

Option 1

I think it is still 50/50 between Option 1 and Option 2. But given the strength of today's move and after reviewing these charts again, I will keep option 1 on the front burner. I know I mentioned to watch option 2 in the chatroom but I think this option has a slight lead.

On the above chart, there are actually three sub options which I will call:

1a. Subminuette a red of minute [b] is complete or near complete today and consisted of subwaves [A]-[B]-[C].

1b. Subminuette a red may actually consist of a [W]-[X]-[Y] substructure, whereby the rally today completed wave a of [Y] and we may be pulling back for b of [Y] before a final c of [Y] launches higher to complete subminuette a near 1205 or so.

1c. A more bullish option is that a nested 1-2 up is in play or today's rally was wave [iii]. I do have an issue with this count because wave 1 in this scenario does not count well as a five wave structure off the 11/16 low. I highlighted this issue in the chatroom yesterday, see charts at 11:08 and 11:11.

See the bottom two charts below. I was tracking the structure at approximately 8:08 am yesterday.

1 MIN HIGHLIGHTING 4-1 OVERLAP OFF 11/16 LOW

Notice where i have placed the horizontal lines. There is no way to get a clean five wave count without a wave 4 overlapping into one. This still leads me to believe that were are working corrective waves up and down.

Option 2

Option 2 has subminuette b of minuette (y) complete today. Once again, wave [C] in this scenario expands [A] by 2.618%.

Subminuette b also retraces subminuette a nearly 78.6%. That's pretty steep but allowable.

If this count is correct, a sell off would occur in a five wave fashion to complete subminuette c to complete minuette (y) below and ultimately minute [a] of Minor 4.

I have drawn in a new EW channel to project for minuette (y). Subminuette c of (y) either heads for the bottom of the channel or possibly hits the center of the channel right near the 1175 level again, which is strong support.

Option 3 - Is Out

This option is out based on the way it is labeled. There is not good way to count a five wave impulse down yet. If there is not way to count a five wave move down, this bear option is still on hold.

Minor 4 Target

Here's an update to this chart where I initially drafted and idealized structure for Minor 4. I'll keep updating and adjusting the labels as this structure plays out.

It is interesting how we close below the top of the previous ascending triangle. Perhaps it is signaling the end of subminuette a of minute [b]. Again. Let's let the waves tell us.

SPX - WEEKLY MA

Here's a close up of the weekly MAs. I have been watching this MA and mentioned a few weeks ago after the market broke through, we would need to see a few weekly closings above this level to confirm a more bullish bias.

So far we have seen two weekly closes above and potentially setting up for a third week. If we close green tomorrow, it appears we may get a hammer right over the MA. I would say that would be bullish for the markets.

Should we close below, well then it may be signaling some more selling to come.

8:07 AM PST

8:11 AM PST

The 8:07 and 8:11 charts above are 1 min intervals highlighting the move off the 11/16 low

11/12/10 - EOD UPDATE #2

SPX - 30 Min

Ok. Just re-posting this chart with a possible target area for minute [b] or minuette (a) of [b].

EW guidelines states that wave 4 is usually a flat, triangle or flat combination. This makes me think we could see a much higher bounce next week than many are expecting. But then again the market has done completely the opposite of what I have been thinking :)

One option I like is that this Minor 4 completes a flat combination. It would make sense to move sideways and to alternate with Minor 2.

Minor 4 IDEALIZED STRUCTURE

Based on this chart, the primary idea would be that Minor 4 completes a large flat but based on the sized of minute [a] the way I have it labeled, it may require more time.

So I present an idealized structure for a flat combination that ends with a zigzag. That last zigzag minute [y] would also push Minor 4 all the way to the terminus of minute [iv] of Minor 3.

Minor 4 in this case would alternate with Minor 2 perfectly.

All this of course is getting way ahead. So we'll just have to see how it all plays out.

200 Week SMA

200 Week SMA

Last week we closed above the 200 week SMA. I mentioned then that we would need to see it close above for a few more to maintain a much longer term bullish bias.

So far today, we pulled back towards it and closed right above it. It currently sits at 1192.15.

Bear Option

Let's not forget the bear option. I don't think it is occurring right now though because I don't think the waves are too impulsive at the moment. But if it is, this is the option I'm watching.

Other things to consider is the fact that we closed below the longer term ascending channel and kissed the underside on a backtest.

The daily MACD also crossed down today. We'll have to see how strong that momentum is because back in April the daily signal was crossed up and down three times even though the market marched higher.