10/26/10 EOD Update: SPX, /DX and EUR/USD - [5:00 PM Update]

[5:00 PM Update]

SPX - Triangle Option

Let's not forget about this option that I posted on Saturday as well. We could be working on a triangle or just a wave (iv) flat. The flat option just completes this patter at [C].

Either way, we may be in for some chop for the next several days or wave [5] takes us higher in the option below.

EOD Update

SPX - 60 MIN

I'm sorry I wasn't around much today but I'm glad I wasn't around to watch this day. If we are truly working on subwave [5] of the ED, a three wave structure is to be expected.

We may have seen waves a and b play out today and the beginnings of c. If is this correct, wave c should take us higher.

The 5 min chart below shows some potential targets for c based on an extension to a. The chart above shows what the maximum length wave [5] may be if it is to remain shorter than [3] and stay within the rules of an ED.

SPX - 5 MIN




SPX Alternate

This would be an alternate view with a second alternate wave (iv) flat. In this scenario, wave (iii) topped at 1184.38.

SPX- CCI

Here is something to consider for a call to a top of this leg up. This past Saturday, I presented the CCI chart and speculated that we may be seeing a repeat of April just based on the behavior of CCI.

At the time, I was looking for a third touch of the trendline and wanted to see what the market would do. We briefly broke above it yesterday only see it fail today and dip below 100.

As you can see in the chart, back in April, after CCI made a third hit of the descending trendline and break below 100, we sold off down to 1010.91.

If this is signaling the sell off, I'm still watching 1171.17 and 1159.71 to confirm by price.




However, when you look at the dollar, it appears to be working on a wave 4 triangle of a wave 3 or C down. If wave d of the dollar begins in earnest tomorrow, we may see our wave c of [5] up on the SPX.



The EUR/USD looks like it may be in a wave 4 triangle as well before heading higher for one last wave 5.

10/26/10 - 8:37 AM Update

8:37 AM Update

SPX - 60 Min

Ok. I wanted to see a confirmation to the hammer reversal at 7:30. So far it appears to be that way. Does it qualify as a bullish engulfing hammer?

I have to run for the next several hours. I hope to be back before the close.

If not, I'm still watching the 1171 and 1159 levels for further signs that a top may be in. Until they break, I'm leaning towards working higher in a wave [5] of the ED.

GL!




8:00 AM Update

SPX - 5 Min

Here's the 5 min update.
7:28 AM Update



I am feeling more confident about this count as long as those key support levels hold. Based on this count, wave [4] retraced [3] 50%.

The hourly is sporting a very large hammer. Just need to get confirmation now the next hour.

Notice that once again, the market has found a way to climb over that pink ascending trendline?


6:58 AM Update



I believe this may be the most relevant count at the moment.


6:43 AM Update

So far, if this is still wave (4) of the ED, it has retraced (3) 62% and wave y of (4) is 1.618*w of (4).


Pre Market


Pre market action suggest that a top may be in at the moment but we need further confirmation. I would like to see wave ii red at 1167.25 breakdown first and ultimately 1155.55 where I have wave 4 labeled.

The cash equivalent levels are 1171.71 and 1159.71. A bounce near 1180 would make wave iv of the ED retrace wave 3 62%

10/25/10 EOD Update - 6:30 PM

EOD Update - 6:30 PM

MACD

Here is a look at the MACD daily going back to 8/2009. This may get the bears excited but then again, the bulls may get excited as well. You decide.

The case for the bulls:

Currently the histograms are sloping towards zero and the signal line is turning up right where it is backtesting a long term trendline that was rejected twice in September but then broke through in October.

The case for the bears:

Turn your attention to the ovals I have placed on the chart. They highlight a similar pattern that may be repeating right now. Look at the two ovals I have placed to highlight a potential pattern that may be repeating. The first oval represents the the setup towards the April-July decline .

Notice where I have the peaks (PK) labeled and the trough (TR) as well as the failed backtest.

Makes you wanna go hmmm....



EOD Update - 5:50 PM



Here's a channel I've had my eye on as well. I was speculating that the market may try to tap the upper channel before it's reversal.

I also like viewing the waves through different charting tools. It sorta helps to see it differently. And yes this is a slightly different variation to the count as well.

The top of the channel just so happens to hit 1203ish and up. We'll see.

I haven't been following along but read that tomorrow is a POMO day. Maybe that's the final push the market needs to hit the top.



EOD Update






Ok. It looks like the market found support at the top of the previous range at 1185. One thing I will not deny though is that there is a possibility this rally leg up may have completed today at 1195.35.

I apologize in advance if my 1st chart is too hard to follow. I had to incorporate most of the labels to show the main options I am looking at right now. I would have preferred to have shown my thoughts with the StrategyDesk platform but I just don't have access to it right now.

I believe there are three to follow:

1. We completed or nearly completed wave (4) of the wave (v) ending diagonal at the close
2. We are currently working on wave (C) of the triangle.
3. The rally since 8/27 topped today.

According to option 1, wave y of (4) =.618*w of (4) at the close. Wave (4) has also retraced (3) 38.2% and managed to stay above the trendline using the 10/19 and 10/21 lows.

Based on this option, I am expecting wave (5) starting around tomorrow. This count losses momentum if the market breaches 1171.17 and is completely out if 1159.71 is taken out.


Based on option 2, we completed wave (B) of the triangle at today's high. The pullback that ensued is wave (C) in progress. This count is out if we breach 1159.71

Based on option 3, we topped today and should expect a reversal that will take out 1171.17 and 1159.71.

So in summary, the first area below to watch out for is 1171.17, which the market may signal that the top is in. However, I'm still leaning towards a move higher towards 1200-1218 to complete wave (v).

I have to run for now but will try to add to this post later.

10/25/10 12:25 PM Update

12:25 PM Update
I think we are going into (5) now of the ED option. I will add that this bounce may still be part of the x wave.

I think the lower black trendline should hold though.


10:40 AM Update

SPX - 5 MIN

One possible path. Maximum frustration unless you're scalping this oscillating ride.


9:23 AM Update

SPX - 5 MIN

I'm watching that lower ascending trendline and the 1183-1186 levels.

1186 = a 38% retracement of wave (3) and wave c of (4)= .618*a of (4).

1183 = a 50% retracement of wave (3) and wave c of (4)= a of (4).

SPX - 60 MIN PREFERRED

Did we get the end of wave [3]? Last week, my EOD post looked for 1193. We got 1195.35. That's probably close enough.