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Tuesday, May 25, 2010

Tuesday updates

After the close, A simply amazing day, the SPX traced out more then 70 points today, and finished very close to where it started. The price action did break the channel right before the close, another good sign that we are in wave ii of 3 now. I have the ii wave up labeled with an a-b, currently in wave c, and would place odds fairly high, that this correction will turn into a complex, double zig-zag, that is, a-b-c-x-a-b-c, finishing up around the 1090-1120 level. That open gap will be a very large target for a retrace, but above that is some resistance, at 1119.03 from a previous high. If the SPX were to retrace more then 61%, I would really question if the move up was corrective.
The trend is still down as we did make a lower low today, if/when we break above 1095.09, the trend will go neutral, and anything above 1119.03, will be bullish, or up!!!
Breadth ended the day at 1.74:1, decliners on 42.9% sell volume, after reaching upwards of 30:1, with 92% sell volume earlier this morning.
** Again, I would like to remind everybody, that it is very possible this whole sell-off is completed, and we are now starting an impulse wave up. The blue, a-b, on the chart above, can just as well be labeled a 1-2.
Click here for a live, and updated chart!!!
8:55, Updated SPX count, still not 100% confident that the 5th wave did not already end, it is very possible that we had a 4th wave put in with the futures, before the cash market opened this morning, and if so, we could already be in the ii wave up. However, the structure does look like a 4th wave triangle building from the low of the this morning. If the SPX does head higher to fill that gap, then the 5th wave has been finished.
Current breadth, 10.31:1, decliners.

8:30, Updated VIX chart, where the VIX never did make a new high this morning as the indexes were making new lows, this is not good for the bears having the VIX not confirming today's bearish move.

7:51, Here are the longer term counts. Next support for the SPX is at 1029.38, the low of November 2nd. One good thing the bears have going for them, is the RSI on the daily chart has made a new low, taking away any divergences for now. A break, upwards on that trendline on the RSI most likely would be a signal that the ii of 3 wave up is underway.
Breadth is currently 21.05:1, slowly declining since the open.
** I ran out of annotations in Stockcharts, and was unable to add and adjust all the labels for the corrective count. The labeling from Nov, to Feb, still need re-adjusting to finish the gray count.

Click here for a live, and updated chart!!!
The Fib fans never stop amazing me, the SPX dropped right down to support this morning, this is now a bullish chart, as long as that support holds!!!
Breadth is currently, 22.67:1

Click here for a live, and updated chart!!!
6:55, I am sticking with this count for now, because the RSI has not made a new low and the VIX is not confirming the move by making a new high. EWI has a different count that is more bearish, with the SPX already in the 3rd wave down, their count has the wave i (green) finished on Friday, and the ii wave (green) finished yesterday, leaving us in wave iii of 3 down. We did make a MAJOR lower low this morning when the old low from earlier February was taken out at 1044.50, the next low that will provide support is down at 1029.33.
** Also of note, this can now be counted as a completed A-B-C down from the top!!!!


  1. Another possibility is that your intermediate wave 1 low of 1,065 is actually minor wave 3, with the rally to 1,173 being minor 4 and the completed 5 wave structure down to this morning (or 1 more low for 5 of 5 of 5) completes intermediate wave 1.

    If so, a larger rally would insue: 50% retrace would be 1,130 and the more typical wave 2 retrace of 60% would be 1,150. S&P 1,150 would set-up a perfect head and shoulders top (Jan - April - June?), which would project S&P 870 to the downside.


  2. Good Morning Mike,

    Your EW charts have been spot for some time now. I have very little EW training but the start of the next wave up, won't it be impulsive? So this last wave we are in now should still have another push down in it and then we should see a sudden turn around to start the next wave. Or am I way off in my thinking?

  3. mjt, Agree, it is a possibility!!!
    Kim, You got it!!!, it will be impulsive in a smaller degree, but the ii wave up will be corrective over-all.Wave A and C, of ii up, will be impulse waves unless we get a complex correction.

  4. Mike one last question. This final push down before we start the corrective wave up. Does it have to be, or can it be, to a lower low than we saw earlier today? Thanks again for taking time to answer my rookie questions!

  5. Kim, NP, it should be a lower low, but 5th waves can truncate, so it is never a given. Kim, if you ever have a question, you can also ask it in the chat room,(CiL), and it will get answered faster.(I spend the majority of my time there, and only check comments on the blog every couple of hours) :)

  6. could this be an ext 5th wave?

  7. hey Col how about today as extended fifth and the bottom of minor 1