EOD Update [9:25 PM Update]

[9:25 PM Update]

ES

Wave a of 3 sports five very clear EW waves. Browsing the blogosphere tonight, I see talk by many who want to short this rally (assuming this holds up by the open). This count above should be considered should a pullback result but it may only represent a wave b of 3.

Just something to consider.

Repeat?

Here's a chart I continue to update in the chat room. So something to consider. Should this overnight rally hold, will this represent progress towards A? or will this confirm that point C? has already completed and does not turn back for a while.

SPX - Weekly 'W' Bottom?

And still tracking this pattern. So far it appears that step 4 may be in progress after all. Note the level where the upper Bollinger Band is currently at?

For more on this pattern see this previous post.

1268 anyone?


EOD Update

Things turned out pretty much as expected in yesterday's post albeit a minor hiccup at the open as the market rallied 14 some points before finding a daily low near 1220 and then rallying into the close.

The rally off the day's low counts as three waves up so far and what may have been wave 4 into the close.

All three counts below are still in play. A 30 min MACD buy signal was confirmed today with the 60 turning up.

The bears need to reverse this starting tomorrow or it looks like the most recent high will be challenged at 1256.

Primary

Alternate 1

Alternate 2

Battle Line

Advantage bulls at the moment.

SPX- 60 Min TL

Short term this may be a key TL.

McClellan Oscillator

Not sure how much this +ve divergence will play a role but the past two days show a reading of 49 and 71. Granted there is no divergence with the SPX on a closing basis but certainly a divergence with the reaction lows. Anyway, couple this with the primary count and a few other indicators and this may be indicating a move higher for SPX.

The weekly MACD continues to build on its buy signal confirmation. So absent a reversal the next three days, this should be confirmed.

Notice the 80 week SMA (blue line). It currently sits at 1213. So should alt 1 or alt 2 play out, I believe it may provide a floor for the market.

A possible target before a larger pullback. That just so happens to coincide with the 200 day SMA.

EOD Update [9:28 PM Update]

[9:28 PM Update]

ES - 5 min

ES (Dec) makes a nice wxy. I do see a potential impulse count building as well. However, at the moment, there are only three waves down.

Should we see a bounce early next week, the height of that bounce will help determine if a five wave impulse down is forming.

We should keep an eye on this channel.

[4:43 PM Update]

I'll call this one the dark horse. This is the isolated count for the green option below. I think this one is going to catch many off guard since the "bear flag" is "obviously" forming in front of us.

EOD Update

So much for my call for a third leg up to challenge the upper channel. As bearish as today was, all is not lost on the EW side of things in terms of the count options I have been following.
The market appeared to have found support at the lower end of the channel once again.

I continue to post the 60 min chart with those four options I'm watching carefully. Though they are ranked in order, I have a stinking suspicion that the green option may be playing out and fool everyone thinking this bear flag breaks down.

The main clue to this is the fact that the market still has not made a lower low and the highs are converging.

Of course the gray channel will provide clues and signs that the red count is in full swing should the market break below it and ultimately below the red X low at 1121.09. Until then, all these options should be watched.

For now, all options point to at least some type of rebound early next week. 1170-1175 seemed to be jumping out right now at me in terms of Fib extensions, retracements and Bollinger Band studies.

I guess we'll see next week.

60 Min - Four Options

Impulsive Option

Corrective Option

30 Min Bollinger Bands

If a 'W' bottom is forming here on the 30 min interval, we should expect a test of the 20 SMA which is currently at 1169.

EOD Update [2:25 PM UPDATE]

[2:25 PM UPDATE]

Let's keep this option in mind as well should the market find itself moving in an indecisive fashion.

Below I also forgot to mention that the Adam and Eve Double Bottom most likely confirmed today as well.

EOD Update 

I guess you can say Saturday's post was correct. We now have the SPX, DOW, RUT and COMP all above their 8/17 reaction highs, which invalidates the large triangle as suspected.

The primary count I am watching now is

SPX - 10 Min

Off the 8/22 low, I see a minimum of three waves up. As you can see there are a still several options at play. For now, I'm gonna say that wave 3/c blue completed into the close in what was an ending diagonal.

As you can see I left room for the completion of wave 3 yellow. Should a five wave impulse be forming, the market should not pullback into wave 1/a blue at 1190.68. However, should this overlap occur, we must not rule out a much more bullish nested 1-2 up either. I'll address that if need be.

I believe the market is working towards the 1228 level with a potential to challenge the 50 day at 1259. See the Bollinger Band 'W' bottom below.

SPX - 60 Min

Here's the hourly view. 

SPX - Daily

And the daily view.

Daily Bollinger Band - 'W' Bottom

Looks like step 4 of the bottoming process was confirmed today. Should this prove to be correct, a move towards the upper band should be in progress. This lines up with a test of the 50 day SMA.

SPX - Monthly

Longer term, a close above 1179 by the end of the month can be viewed as constructive. Two days from now a close above 1179 will find the market above the 50 month moving avg after surviving a test of the 200 month and backtest of a long term trendline.

The Triangle Breaks Up [8/28/11 8:23 PM Update]

[8/28/11 8:23 PM Update]

With ES up 8 and change tonight, I wanted to explore the fib extension targets for wave (iii) should ES hold and this gaps up at the open tomorrow. Wave (iii) makes a nice target at 1213 if it's 1.618*(i) and 1241 if 2.618*(i). Notice both Fib confluences.

Will see several hours from now if the mid-channel contains this move up. 15 min MACD appears to be building a negative divergence.


[8/27/11 Update]
I believe the odds are greater that the market will break up and out of the triangle that many analysts are watching, which implies either: 1. A larger degree wave 2 bounce is in progress 2. A wave 4 flat is in progress or 3. The correction is over and on to new highs.

The transports clearly sports five waves down with a lower low for wave 5 and an hourly MACD positive divergence to boot. To me this is telegraphing a much higher bounce is in store and would imply that SPX and others most likely will break up and out of their triangles.

Transports

SPX

All bets are off for the triangle if the market should rally over 1208.47.

SPX - 5 min

Here's a 5 minute chart showing five clear waves down off wave 4. Wave five in this case for SPX truncated. Again, the transports made a lower wave 5 here.

A nice bounce so far off the mid-channel.

Bollinger Bands - Daily

I don't believe this rebound is a wave 2 of 5 either because of the confirmed daily MACD buy signal so I'm going to presume that 1208 will most likely be taken out.

And last but not least. Anyone consider this option? Would be a great way to fool everyone.

3:48 PM EOD Update

3:48 PM EOD Update

I'm not sure where all this bearishness came from all of a sudden but this is what the primary count would project to once wave B yellow is complete. 














3:14 PM EOD Update

I believe the primary count is that a large triangle is forming for wave B yellow.

w5 min

I believe wave C of the triangle is nearly wrapping up. Early next week, I'm expecting a tiny pullback to wrap up wave x pink of Y blue.

A final wave y pink of Y blue either terminates on the inner blue triangle TL (see below) at 1185ish or pushes higher to the larger red TL near 1200. This would complete a complex wave C.

Primary Count - SPX

As stated above, I'm looking for wave C of the triangle to complete.

ES

Notice that ES looks like it may be complete or very close to completion. However, cash looks like it has a little more to go.

First Alternate Count

Should the market rally beyond 1200, I believe the next viable option is that wave c of Y launches towards 1228ish. It either accomplishes this with a simple impulse wave for c of Y or all of Y is turning into an Ending Diagonal. We should have more clues later next week.

I like this count almost more than my primary due to the bullish daily MACD configuration. However, because price still remains within the triangle trendlines, I will interpret it as such until either TL breaks; up or down.

13 Week EMA, 80 and 200 Week SMA

The market rally back above the 200 week. The 13 week EMA and 80 week SMA look like attractive targets.

W Bottom

I'm still tracking this. Again, I think the confirmed daily MACD buy signal is telling us to expect step 4 to take out the 1209 level.

Second Alternate

Should the market continue to remain indecisive and trade within the trendlines, we need to be mindful of this option as well.



3:14 PM EOD Update

This is something I'm thinking about here among a slew of options. I'll leave it at that for now and present my current primary counts later.

EOD Update

EOD Update

5 Min

This is the primary count. I have wave y pink wrapping up in an ED within a larger falling wedge.

Once this is complete, I'm expecting a push up in a wave 3/c higher. Should my primary for B yellow turn out correct as a zigzag up, this leg should take the market past 1200 and eventually complete the impulse for wave c up near 1224.

However, should it only take the market up to 1200, see the triangle option below.

The bigger picture primary.

Here's the isolated view of that triangle for wave B yellow.

W Bottom

This pattern is still developing and remains on track. The big question now is what step is it in? Did it just complete step 2 ( I believe that completed on 8/17) or is step 4 in progress. Perhaps the daily MACD confirmed buy signal provides a clue.

EOD Update

Sometimes it's better to be lucky than good.

Yesterday, my near term bullish and bearish count options indicated that a low was most likely in. In fact I believe I was calling for a bottom last Fri.

I will continue to post just the near term options because there still are a multitude of options with the bigger picture.

Based on this option, I'm looking for a wave c green up with a target of 1224. C=A here as well as makes for a nice 50% retracement of the 7/7 high to 8/9 low. See the larger count here.

Notice I have iii = i at 1172. This is also near the 13 day EMA which is currently at 1174.60. This will be a level to scale over to continue to push for the bullish count.

Based on this option, today's rally was part of wave 2 up of 5 down. If this count is correct, I'd expect a rejection at approximately 1175. This is the 62% retracement of wave 1 of 5. Wave c of 2 = a of 2 here as well.

Clearly a rally above 1209 will rule this count option out and solidify the 8/9/11 bottom.

It appears the 'W' bottom on the hourly is playing out. Note there is also an Adam and Eve double bottom in the works. A break above 1209 would confirm this double bottom pattern and would project to approximately 1300.

Keep the daily W bottom pattern I presented on 8/19/11 in mind as well. The 20 SMA is currently at 1200. Should the daily break through, that would confirm step 4.

Daily

For more information on the W Bottom see stockcharts here.

For the Adam and Eve double bottom pattern click here.