Wave Principle

Thursday, December 8, 2011

12/8/11 - Pre Market

Looks like the market is reacting positively to the better than expected initial jobless claims.

ES currently counts best like the rectangle option.

Wednesday, December 7, 2011

12/7/11 - EOD Update

Late post for me so I'll keep it short. I made some adjustments to the option1 and 2 counts I have been tracking and removed the triangle option, which became the primary rectangle option below.

Rectangle Option

With today's early AM sell off, the rectangle option appears to be the count to watch for tomorrow. Based on this count a wave iii of 3 up is to be expected.

If the market cannot blast through and make a new high, which BTW would push through the 200 day SMA, we must respect the new option 2 count below.

Option 2

Should the market fail to push through the 200 day SMA, the next best alternate is a wave y drop to the 1230-1225 levels. A move to 1225 lines up with a 38% retracement of 11/25-12/5 rally.

Repeat?

Here's one pattern that may favor option 2. Notice that in April, the market traded in a range for at least 5 days before finally pulling back. Perhaps the market we're seeing the same thing again.

SPX - Weekly

I am still keeping an eye on this chart as well. A move over 1271 will take the market over the red TL.

12/7/11 - Pre Market

1 Min

So far I count three waves down off yesterday's high. In fact the tiny squiggles for the top half of the wave suggests that an a-b-c for wave W is more appropriate.

So very near term there are 2 things to watch for. If the bears are starting a new five wave impulse down, any bounce at the open cannot retrace back into wave 1/W (1262.92) grey or there will be a 4-1 wave violation.

Second, if this is a double zigzag down, wave a of Y may have only completed and a bounce at the open may only be wave b of Y before one more leg down for wave c of Y.

Until wave b is put in I cannot project for wave c but assuming wave b retraces to 1261, wave c=a at 1256. So something to keep in mind.

Option 1

Still watching this as the primary count. Though I'm assuming wave 5 is complete, I have a few side options for this count:

1. Wave 5 is extending. I'll say this option will be out if a break below 1255.26 occurs where I have wave c red.

2. A flat is in play and wave c pink is expected to retrace at minimum back near the wave "or a" pink

I will also be keeping an eye on that ascending blue TL. That plays a role for the triangle option below.

Triangle Option

Here this is again. A break below 1243.35 will knock the tri option out as I have it labeled. I'll be keeping an eye on the green TL for this option which is currently at 1252.

GLTA!

Tuesday, December 6, 2011

12/6/11 - EOD Update

For those of you who do not follow me on twitter (click on the link towards the right side of the page) or in the real time chat room (CiL), I apologize if you were not able to see these charts earlier during the day here.

It is much easier to push out counts and adjustments to those counts via twitter/CiL. So check there also through out the day as I update my counts along with the 1 min squiggles when I have time.

As for today, I see13 waves up. It's nice to be prepared for that.

The market has now put in the necessary waves to count a complete impulse wave up. However, does it want to push for 21? The daily MACD supports this but the hourly and lower time frames does not at the moment.

Option 1

My primary count. With the completion of 13 waves, this is how it would count as a compete impulse wave. However, on this chart, I have left room for the possibility of an extended 5th wave. I do this because of the potential triangle option below. The market may be indicating to us that it is consolidating before it's next move higher.

Triangle Option

I presented this option during the day today. I have also made some adjustments with the alternate labels.

The alternate count for this option works well with the primary count I have been tracking for some time now as highlighted below: