9:15 AM Update

I posted this at 9:05 PST (12:05 EST) in the chat room. A good chance we may have seen the end of this move just below the 1173 pivot.

8/4/11 EOD Update

EOD Update

All I can say is "Wow". That was some serious selling today.

If the bulls are going to pull off new highs, I only see two ways that this can be accomplished from an EW standpoint.

For now 1190 may be a target for a bounce if the market finds support at the 50% retracement of the Jun 2010 low to May2011 high. 1190 is approximately where this third leg down is 2.618* the first (see the third chart below for the Fib extension).

And keep in mind any rally that takes the market back over 1295 before 5 waves are completed down will once again delay any bearish count.

Either a very bullish nested 1-2 i-ii up (which is very questionable) or...

One final wave C push in this double zigzag up.


This is how I would count the waves if a top is in. Notice how a wave 3 low at 1188 would equal 2.618* 1? This is also the same level as a 50% retracement of the Jun 2010 low through May 2011 high.

This may be a good area for a bounce.

Still watching that bearish head and shoulders target at 1150.

8/3/11 - EOD Update [10:05 PM Update]

[10:05 PM Update]

Here's an update to this chart I posted back on 7/2 along with the Elliott Wave Oscillator on 7/17. It's the same as the 5 Year Bull Chart I posted earlier via TOS.

I wanted to highlight the Fibonacci confluences again.

[9:54 PM Update]

Bounced right at the yellow 62% Fib fan. Hmm..

[9:37 PM Update]

Adding to the potential repeat of the failed H/S is the potential for a second daily positive MACD divergence. This may provide a clue as to whether or not a new high is coming.

I'll be watching this one carefully.

RUT- Daily

[9:00 PM Update]
Should we treat these as ascending triangles instead of the bearish head and shoulders?

EOD Update

The market pulled off a 25 pt reversal today and formed a hammer with a very long lower shadow. I say that's signaling that the market is at least due for a bounce. Perhaps target the 200 day SMA at the least?

Closing back above the 1250 level was also key in showing that the bottom of the 6 month range is still in play.

The first two charts below highlight counts that are looking for new highs to come.

The triangle is dead, however, I still believe the wave structure over the past 6 months has been a very complex corrective consolidating a trend that has been up for over 8 months.

If that is correct, the above count is one way of viewing it.

5 Year Bull

However, this chart has it in a wave 4 of a larger degree, which I think may be more applicable. This count is out if 1219.80 is breached below.


Though not an impulsive count, these corrective count options I have been following also allow for new highs to come.



Channels to watch.

This bearish head and shoulders pattern is being watched by all. This was the headline on CNBC right at the close. So now that everyone is watching this, will it play out or fail again like it did back in July of 2010?

Today's rally into the close may only be a backtest of the broken neckline. We'll have to see if it's rejected or gaps back over.

As of this writing, ES (SPX futures) is up approximately 5 pts. Should this be maintained, it should gap over into the open.

Here's the near term bear count. So far three waves down are complete or nearly complete. The wave 4 bounce will determine if there is a new impulse down. 1295 is the key to this. A rally back over 1295 will result in a wave 4 overlap into 1 and rule out the impulse down.

8/2/11 - EOD Update [3:53 PM Update]

[3:53 PM Update]

Below are the remaining bullish counts.

This bullish count remains valid so long as 1220 holds.

This chart is a corrective count but the red labels would call for a new higher once this consolidation completes.

[3:35 PM Update]

I added the Fib retrace levels. A nice Fib confluence resides near 1150.

Earlier I mentioned that we may have seen the top but keep in mind that top could be just five waves up of a wave 1/A of one higher degree.

A more bearish pullback as a result of this H/S would result in a wave 2/b. How this all fits into the bigger picture I'm still not too sure. Check back later for that.

EOD Update

The triangle count I have presented for quite some time now is nearly out. The minor 5 in progress count I recently carried as the primary is out. Things appear to be quite bearish at the moment.

With that said, I am still watching what happens at 1250. It is still very possible that the market trades within the 1250-1270 range as it consolidates before moving higher.

However, with the neckline break below the head and shoulders pattern and a close below the 200 day SMA, we must consider that the top may have been put in on 7/7/11. What top that is exactly is yet to be seen.

I have other ideas on some possible counts that may accommodate a new high. However, the bottom chart below is something I am truly considering as the end to Minor 5 for now.

Stay tuned for the other counts.