5/5/10 - SPX EOD

 SPX 60 MIN

 SPX DAILY TRENDLINES

It's been a long day for me and this is a late post so I'm going to try and keep it short.

I still do not believe it is very clear where we are with the structure after the past two days of selling. There are valid arguments for both camps that still exist. I, however, still lean towards the bull camp on the count since I'm counting with the daily trend.

For the bears, at the moment, we are looking at only 3 waves down, of which the 3rd wave is clearly sub-dividing into 5 waves or has sub-divided into 5 waves.

From a bull argument, the pullback may be counted as an a-b-c structure, i.e. 5 down, 3 up, 5 down.  Not much as changed from my 60 min count above.

I show wave (c) near completion or as completed today. Currently wave (c) is 2.00*(a)  which is a nice Fibonacci relationship. Should (c) require more time and follow through, I would look to a 2.618*(a) relationship somewhere near the vicinity of 1145 (1150).

Alphahorn reminded me yesterday of a guideline from Elliott Wave Principle, pg 66, " The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave on one lesser degree, most commonly near the level of its terminus." 

On the 60 min chart above, I have a red line that represents the terminus of wave 4 of one lesser degree. That terminus resides 1165.77. Today, the market has followed through to this level and closed just about dead even with it, 1165.87 to be exact.  Wow, that's one 10th of a point.

So if this guideline where correctly applied here, it may be inferring that the correction since the 1213 top has been a wave 4 correction down, which is an alternate count I have had for sometime. I'm still calling this a Minor B but either way both imply the same thing, higher prices to come in a 5-wave structure whether it be via minute [5] or Minor C. 

A confirmation that this pullback is complete will come if the market can rally over 1181.62, which represents the bottom of wave 1 of the bear count. Since we know wave 4s cannot retrace back into wave 1, this will help confirm that the pullback was not an impulse wave to begin with. 


On my SPX trendline chart above, I point out a couple spinning top candlesticks that were located at the bottom of a few pullbacks over the past year and a half. Of those spinning tops, a rally to new highs followed. 


Per Stockcharts.com, "After a long decline or long black candlestick, a spinning top indicates weakness among the bears and a potential change or interruption in trend."

I was hoping to get a 5 min chart out but I am pooped. I may try to scribble one out in the am so check back later. 

5/4/10 - SPX EOD - DOUBLE THREE : ZIGZAG

SPX - 60 MIN PREFERRED COUNT

SPX - DAILY EMAs

SPX - DAILY SMAs

E-MINI

SPX - 60 MIN REVERSE FIBONACCI

Well today was a good day for the bears. The entire month of April provided a nice opportunity to trade a very decent range. 

As posted this morning, there were two combination Elliott Wave patterns I wanted you to be aware of. The triangle option is certainly out, however, the flat-x-zigzag combination is right on the money at this time. 

I was looking at 1180 for support but knew if it broke, 1170 +/- 5 was next on the list. 1170 coincided with wave (c) = 1.618 (a) of the zigzag (~1166), the 50 day MA and a heavy Fibonacci confluence occurs here. I posted on this last week on reverse Fibonacci techniques (click on the link as I used the technique to predict where the market may head and find a turn). An  updated reverse Fibonacci chart is above.

The count still allows for (c) to equal 2.168*(a), which equals approximately 1140. So we will have to keep an eye out for that. From a probability standpoint per EW, the 1.618 ratio is a more typical relationship that wave C has to A.

So what does this pattern have going for it?

1. Structurally the count looks complete (technically can be counted as complete). 

2. The structure off 1219.80 looks primarily as a 3-wave structure vs a 5-wave impulse

3. Fibonacci relationship of Wave C to A

4. Market found support at the 50 day MA

5. Trendline support : Ascending (Marc 2009 - Feb 2010) and the lower Channel line

Some alternatives for the double three combination are:

1. Minute [x] of Minor B may have completed at 1205.13 on 5/3, which would mean today's drop is only the beginning of (a) of [y]

2. Minute [x] is appropriately labeled and we may be working out a second flat vs a triangle. 

3. Wave (c) of [y] may have some more to go; target ~ 1140.

Both alternates imply that a bounce back up is required before resuming a drop to complete the double three formation. 

For the bear case, here are few things to keep in mind.

1. The count appears to have a nested 1-2 formation. This implies that today's drop was the 3rd of the 3rd and should follow through some more tomorrow.

2. Notice on the daily SMA chart, the last decent pullback we had rested on the 50 day MA and followed through the following day before finding support at 1044.50.  

3. A break of the neckline of the large head and shoulders pattern. Would like to see a backtest and drop to confirm.

I'm anticipating a bounce back towards 1180-1185 since either bull / bear case will seek this at a minimum, whether it is a backtest of the neckline, a wave 4 retrace of 3 or an x wave up of another flat. Where it goes from there will be telling. 

GL!

5/3/10 - SPX EOD

SPX - DAILY PREFERRED

 DOUBLE THREE COMBINATION

 Elliott Wave International

 DOUBLE THREE COMBINATION

 Elliott Wave International

  

It's certainly nice when the market goes your way after making a call . Last night's post called for a move to 1205 and today we got it.

The market was able to close above the key moving averages once again. So what is now in store? The market continues to slosh sideways within a rectangular pattern.

I have provided two  figures from Elliott Wave which are called double three formations. This formation is called a combination since there are a combination of EW patterns stacked together separated by an "any wave" or "X" wave.

I hope these figures/formation will help you understand what my current thoughts are for this Minor B wave that appears to be taking on a rectangular pattern.  These are but two examples of a combination that I believe we may be witnessing for Minor B.

Compare the two figures above with my 60 minute chart below and you will see something similar is developing. I drew in red lines of some possible paths the market may take. In my example below, I drew in red lines for the second (or double) "three" as another a-b-c resembling a flat. 

The figures above provide two different options, a triangle and a zigzag as the second (or double) "three". So these are final patterns to be looking for as well over the next week or so. So keep an eye for another flat, triangle or zigzag. 

But first we have to complete what I believe is a minute [x] wave or as the figures above labels as "any three". I consider today's rise as part of minuette (c) of minute [x] of Minor B. Targets for this (c) are:

if (c) = (a) = 1215
or if (c) = 1.618*(a) = 1231

**Note: I just thought of something. On the 60 min chart below, my minute [x] wave may also have completed on 4/29 and we may be working on the second "three" now. If there is more evidence of this occurring, I'll update my charts to reflect that should the need arise.**

** One more thing. I normally do not post about Fibonacci time ratios but for those who believe in it, Minor B would complete at .382 time of A at approximately 5/12. We'll see**
 

SPX - 60 MIN PREFERRED

SPX - 5 MIN PREFERRED

I also have a few other options on the table as well. The alternate counts are labeled in gray (notice that the alternate counts are stacked in order of preference). The following is a summary :

... today's rise was minuette (iii) of [v].
...or: we are working on a larger minuette (c) wave down towards 1150
...or: we are working on minuette (iii) down

I posted a 5 minute chart this morning using TOS (since I'm still having problems on my Strategydesk) and highlighted some channels as potential paths for the market. It appears the red center channel was breached to the upside and capped at the upper blue channel. The market pulled back and so far has found support back at the red center channel.


Based on the wave count, I believe it most likely will take out the upper blue channel again but we will have to see if it holds.

So there is work to be done on both the bull and bear camps. We have key support (1180) and resistance (1220) levels to watch as a break in either direction will dictate what we ultimately have. 

GL!