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Monday, January 25, 2010

Monday updates

Interesting to see if the head and shoulders will play out on this chart.

This is the larger picture, and with a definite spot now to place the first 3rd wave, I am able to get a better guesstimate of how far down this sell-off could take us. 1054.68 is the magic number if this turns out to be a perfect, text book 5 count impulsive wave, but they never turn out that way!!!
Also, I still have not seen any signs of negative divergences developing on the MACD, or the RSI, that would indicate that a trend change is right around the corner The RSI and MACD normally peak at the finish of the iii of 3 wave, and then diverge for the 3rd wave itself.

After the close, we had that long boring day of consolidation that wave 4's bring, with low breadth and volume, the trend is still down , because we never made a higher high, and as long as this count stays valid, it is looking like a long and boring week ahead.

The count is still valid, the SPX reached a high of 1102.97, still below the point that would invalidate the count, with the 4th wave entering into price territory of the corresponding 1st wave at 1104.98.

I still have two optional counts, one would be this whole sell-off being a corrective wave, with seven completed waves down, that can be counted out as a double zig-zag, a-b-c-a-b-c, or as an extended 5th, that is completed, both options are low on my list of probabilities because the other indexes do not confirm these two options as well as the structure of the waves today, that in my opinion where much more corrective looking, then impulsive.

Breadth for the day ended at 1.36:1, advancers, on the lowest volume of this sell-off, not what I would expect to see for the start of a new bullish trend, it is much more consistent of a 4th wave with a full day of consolidation that relieves the short-term over-sold conditions from the sell-off Friday.

Levels to watch are 1090.18, that would confirm the trend is still down, and 1114.95 to signal the short-term trend has changed

8:54, The SPX looks as if it is tracing out its first wave 4 pattern, and as long as 1104.89 holds, the count is still valid. The Russell did make a new low this morning, so that eliminated the corrective count that was possible when there are only seven completed waves, that is a-b-c-x-a-b-c, is a seven wave count.
Breadth for the morning started out at 2:1, advancers, and has slowly trended back to bearish, with decliners now leading 1.08:1, this looks like it will be a long and boring day with the SPX consolidating in a 4th wave, as I believe the next couple of days will be as we stairstep our way down to finish the 5th in a series of wave 3-4's.

Click here for an updated Fib. fan chart!!!
6:57, Even with the positive open, the SPX is still with-in the most bearish section of the Fib fans, but is challenging the Fib line, as long as 1104.89 holds, the count is still valid


  1. I agree - count still valid. I posted an alternate count that involves a LD that I am also keeping my eye on. Little concerned about the depth of retrace in what is supposed to be an extending third.

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