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Monday, July 26, 2010

Monday updates

The Summation Index continues to widen the gaps between the daily bars, a very bullish sign when that happens, and in the past has been consistent with the meat of a 3rd wave up.
The SPX closed right at the last bearish Fib fan line today, any up day tomorrow will have the SPX break-out of the only long-term bearish fan, and clears the way for new highs as far as Fib fan resistance is concerned.

After the close, The bears are really losing control, as the SPX had another bullish day today. I have a bearish count posted above, along with a bullish option, and if the bears do not get the selling going, this will turn into a full-fledged 3rd wave up. The Technicals are already supporting the bulls case with the SPX finally closing above the 200 day MA, after already clearing the 20, and 50 day MA. The bears do have declining volume on their side, but we have seen that happen for the last year as the SPX stair-steps its way higher. Once the 1020 level is reached, the Ending Diagonal count is out the door, as the 5th wave would be longer then the 3rd.
Breadth for the day ended at 4.23:1, advancers, which is a strong number, but not as high as we saw last week, again, breadth is starting to wane along with volume.
The Trend does remain bullish, as the SPX made another higher high today, and all indicators on the Trend Finder remain bullish, and as long as the SPX keeps inching its way higher with-out making any lower lows, the trend will continue to be bullish.
The next point of resistance is up at 1131.23, from the high made back on June 21st. Breaking above that level would also void one of the two bearish counts going, leaving only the Leading Diagonal count where the low made on July 6th marks the end of the 1st wave down, and the beginning of the 2nd wave up, and with the LD, a 2nd wave retracement can be extreme, up in the 78% range. If this were to play out, and the length of the "C" wave were to equal the length of the "A" wave, 1145.43, would be the top of the 2nd wave up, which turns into a 64% retrace, perfectly acceptable in EW terms.
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7:22, Possible that the SPX is in the finishing touches of a wedge formation, or End Diagonal.

7:01, This is just one way to count this entire sell-off, and will be the first to get voided if the market breaks above 1131.23, interesting how the RSI is not making new highs as the SPX has done for this current rally, also, possible that a wedge formation is building in the last couple of days, and that might end up as an Ending Diagonal.

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6:52, The SPX is coming up onto resistance on the longer-term Fib fan, somewhere in the 1110-15 range it will hit the last bearish line.

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6:44, After doing thousands of Fib fans, and watching them ever day, this is not a normal Fib fan set-up, the SPX does not seem to be acting like it is in a impulsive wave, but rather in a corrective wave up.


  1. What about a large expanded flat count?

  2. From the recent correction low I see a large ABC forming. Although early days, I suspect that this ABC will be the first part of an ED for wave C from the bear market low. Wave C should reach SPX 1230-1400 area by July next year or March 2012. As an ED is a rising triangle, volume isn't likely to be high and indeed volume and breadth should decline in coming months even though the market gradually moves higher.

  3. Tom, if you are thinking what I am, about a large Expanding flat, could it be a "B" wave?