EOD Update 8:42 PM Update

8:42 PM Update

10 Min

I cleaned up this chart a little bit and plotted some Fib confluences that may be potential pullback targets if the pullback did not complete at 1175 today.

I believe a complete impulse wave down may be counted and keep in mind, it may still be part of an expanded flat and compete at 38% retracement. However, should this impulse only represent a wave a, I expect a 50% retracement of wave a for wave b near 1182 before heading down to either 1164 or 1155.


EOD Update

What a day today. Just when you thought the bulls were in control, the bears arrived to the party. The question now is will they stay or will they be squeezed out tomorrow?

Should this have been a surprise? Not necessarily. So far the target for this leg up has been met. The initial target was 1165-1175 and then adjusted to 1180. The market exceeded that today with a high of 1195 before reversing sharply the last hour of the day.

Now we must determine if this complete the first leg for wave (Y)/(C) of blue (blue option) or the more bearish wave ii gray of iii red (red option). I believe it is still possible the market pushes higher thru the end of this quarter. Please see below for those reasons.

5 Min

The 5 min chart below highlights the internal count showing possibly a wave (w) or 3 completed at the 1195 high. The pullback into the close was either the beginning of  a wave (x) or completed a flat representing all of wave iv or 4. These options apply for the blue count

A near term target for the blue count, if wave (w) or (a) is not complete yet is approximately 1204.

Blue Count

The reasons supporting the blue count:

1. VIX Equity buy signal
2. Bounced and closed above the lower trendline connecting the 8/9 and 8/22 lows.
3. Bounced at the 38% retracement  of wave 3 or (w)
4. Daily MACD looks set to issue a buy signal. (This could easily be rejected)
5. Both wave 2s for the red count are very steep retraces (approx 78.6% and more), which make that count very suspect. Not invalid, but just lower on the likelihood scale.
6. EOQ window dressing

Red Count

As for the red count, the last hour selling is the beginning of wave iii gray of iii red down.These are the reasons supporting this count.

1. The late day reversal
2. Close back below the 20 day SMA
3.

VIX Equity Buy Signal

Trading Range

I posted this simple trading range last weekend. The market just so happen to close below the mid line for the red range. Let's keep an eye and see if it manages to trade back above.

Red Range

4:45 AM Pre Market

4:45 AM Pre Market

What a rally overnight. A little over 1.5 hrs to go til the market opens but I think the 1180 target as mentioned in yesterday's EOD post is a likely target. 

ES may be confirming the blue count option and copper continues to hint at confirming my bullish longer term count. Copper is setting up to confirm the massive hammer it put in yesterday.

I'll be keeping an eye on the VIX again today. Absent a sharp reversal today, the VIX should put in a lower close from yesterday, which should be the final step in confirming the equity buy signal. This coupled with EOQ (End of Quarter) window dressing and this leg up may have some legs further confirming the blue count.

ES - 60 Min

I'd like to see it clear the upper channel of this fork. So far ES has retraced > 62% of the move recent five wave decline.

HG - Daily

HG - Closeup

The hammer confirmation is in progress. It's still up there but a rally above 3.818 and the decline off the 2/15/11 high will be deemed a three wave corrective move.

EOD Update

EOD Update

In Friday's EOD Update, I was looking for a move to 1165-1175 sometime this week or next. I wasn't looking for it to happen all in one day. Anyway, things still look good for both the blue and red counts (*red has been adjusted and thanks to Vodavi in the chat room, I have eliminated the ED option the way I had it labeled for now).

I believe there is still room for this bounce to run and possibly target the 20 day SMA near 1180. If not, as you will see below, price nearly hit the 50% retracement to a tee so if the pullback is to continue, the EW count requirements certainly have been met.

If you are watching the VIX, step 2 of the equity buy signal triggered today, that is the VIX closed back into it's BB. The final signal will be a close lower than today's close for the signal to be complete. This obviously favors the blue count.

Blue Count

Red Count

5 Min

On this chart here, there are a few options. Notice I'm leaving the 1-2 count up open as an option? I know the squiggles may not argue for it but something that must be kept in mind.

10 Min

This version of the bounce heavily favors the red count. Tomorrow's action will be telling right from the get go.

Copper Daily

The copper count still looks very good. It formed a daily hammer candle today so a confirmation will help determine if the pullback is complete.

Copper Closeup

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.