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Wednesday, May 5, 2010

Wednesday updates

After the close, Back to boring, after a full day of excitement yesterday, today definitely had the feel of a 4th wave. We did make a lower low, and no higher highs, so the trend continues as down. Breaking above 1176.97 would be the first minor high that would put this down trend into jeopardy, and breaking above 1181.62 would invalidate this bearish count. The bullish count is also still alive, something to be aware of if we get a good buying spree that starts making higher highs. The SPX after battling back and forth with the 50 day MA (1169.90)did close below it at 1165.88.
The above count is slightly different then the count I have on the chart below, where I have this 4th wave in a different degree. Most of today's action appears corrective after the initial sell-off making this 4th wave look incomplete at the close, finishing only the "A" and "B" wave, with "C" still to go, with a high possibility that it will turn into a triangle (a-b-c-d-e), as it is common for a 4th wave to trace out an alteration of the 2nd wave which was a sharp, leaving this 4th wave as a sideways correction. These sideways corrections are the markets way off reducing over-sold conditions, that will help clear the way for lower lows.
Breadth for the day ended at 3.92, decliners very respectable and the first time in the last couple of weeks that we have had any type of decent follow-thru to the previous days price action. The bears just need to keep it going.
The Dollar did have another good day, making a new high at $84.31.

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8:34, Here is a squiggle bearish count, I still am wondering if I have the last part is labeled one degree too high, with the blue iii placed where I have the blue 3, things would be more proportional. It is possible that there was another 1-2 up there that is missing on the cash chart. BTW, I have the blue i wave labeled as a leading diaganol, in case you were wondering why the 4th wave entered the price territory of the 1st.

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7:16, Here is the bearish 1-2, 1-2 down option, and so far is also still valid. At this point the SPX has no business up around the 1181.62 level, as the 4th wave would be entering the 1st wave. Breaking above 1176.85 (high of the last 4th wave yesterday) would be the first sign this count is in trouble, and would also be making a minor higher high. For now the trend is DOWN, as we have made some major lower lows. Around the 1124 level is gap support which would be a fine target for the SPX to try and get that gap filled before starting into a 2nd wave up.
* Breadth is currently running 4.61:1, decliners!!!

7:05, This first bullish optional count can now be considered finished, it is still possible that the gray count is a viable second option. I had a target of 38% retracement for the "B" wave and the low of the day so far has hit 1158, 6 points shy of the target.

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6:58, The SPX is now on the last line of support for the short-term Fib fan (neon green), that covers this rally since 1044.50
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The short-term Fib fans, are bearish, with no bullish fans in sight. Breaking out of these fans are a warning that the 1-2, 1-2 down count is in trouble, and the bullish option is the most likely correct.

6:53, The VIX gaped up again, leaving four unfilled gaps below, this is troubling having so many open gaps that will be wanting to get filled. Currently up another 13.13%, wow!!!

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