880 & 930

After this horrible choppy month I hope we'll see a bit more action in June...

First, take a look at the three scenarios I posted last weekend.

http://ew-analysis.blogspot.com/2009/05/another-boring-week.html

Well, all three counts are still valid, although the bullish one is now more likely than last week.

The situation is as follows: long above ~930, short below ~880; sounds quite easy, doesn't it?

Since I still prefer the downside (at the moment I don't see how the market can break all the resistance lines and the 200DMA), I looked at the previous bear market rallies. I found some nice similarities:

Nice week folks! ; )

It looks orange...

... but I need a confirmation on Monday. That means that the low of wave ii must hold (904) and since we are in a wave iii we shouldn't see big corrections till 930-940.






Enjoy the weekend ; )

The real action should start tomorrow

Updated my short term count and added the bullish scenario:

still undecided...

Two trading days have passed since my weekend update and nothing has changed...

Below you can see the updated count for my two bearish scenarios. But keep in mind that the bullish scenario is still possible as long as the market doesn't break the strong support level at 875-880.

I replaced the high for wave (ii) (or alt B) after Monday's rally. The action today in the afternoon looks like we completed 5 waves down from the high.

Another boring week...

After another week without any decision neither for the bulls nor for the bears it's time to update my intermediate count for the SPX.

First of all let's take a look on my last forecast (from the 10th of May). The first downwave was about as long as expected and finished at 880. But the following correction was much stronger and retraced nearly 100%. Wave [iii] should now be underway with the first two subwaves already completed.

This is my favourite count:

You see that I labeled the high at 930 as Intermediate (4). From this follows that the SPX is now in Intermediate (5),  i. e. it'll make slightly lower lows in July or August. 

My target for the subwaves of Intermediate (4) are as follows:

Minor 1 ~820

Minor 2 ~860

Minor 3 ~680

Minor 4 ~740

Minor 5 ~634

After the market will have completed Intermediate (5) (and Primary A or 1)  we should see a nice retrace of the whole Primary A or 1 hopefully at least a 38% retrace.

The following chart shows how I labeled the Minutes and Minuettes. Minute [i] down from the 930 high with a irregular flat in the Minuette (ii) position. An ABC (Zigzag) up to conclude Minute [ii] at 925. Then Minuette (i) of [iii] to 880 and (ii) to 897 (a perfect 38% retrace). (iii) of [iii] should have started in the last trading hour on Friday.

  

There is a possibility that the high at 930 was Intermediate (A) of Primary [B]. This won't give us such a bearish picture in the nearer future as my scenario above. The market is correcting in Intermediate (B) which should end between 780 and 820. Afterwards Intermediate (C) will unfold and make new highs in the summer.

There is also a little chance that we'll see new highs (>930) in the nearer future. But this bullish count is only valid as long as 875 holds.

Amazing fibonacci relationships

Today, I played once again with the fibonacci numbers and discovered some amazing relationships between the waves in this bear market.


But first of all let's take a look on my longterm counts:


Blue count
We finished wave 4 and began the last wave down to complete Primary 1 (or Primary A). After that we should see a nice retrace lasting several months before going down again in Primary 3 (or Primary C).


Orange count
We completed Primary A early March and are now in Primary B. After we'll have finished Primary B by the end of this year the market's gonna fall once again in Primary C to finish the bear market in 2011/2012.

I refer to the blue count for the following fibonacci relationships:


The market declined/rose...

20.247% in wave 1
14.579% in wave 2
53.703% (53.28%) in wave 3 (depending on which low you refer to: 666.79 or (672.88))
39.5% (38.237%) in wave 4 (depending on which low you refer to: 666.79 or (672.88))


Let's compare the declines of our downwaves 1 and 3:

53%/20% = ~2.62 => a perfect fibonacci ratio

and now the upwaves 2 and 4:

39%/15% = ~2.62 => once again ; )


ok, now let's compare wave 1 with wave 2 and wave 3 with wave 4:

20%/14% = ~1.38 => again a fibonacci ratio. Wanna guess the ratio for wave 3 and 4? : )

53%/39% = ~1.38 => amazing, isn't it? : D


I'm glad to see another nice ratio after we'll have finished wave 5 ; )


(for better results use the exact numbers)

short term
Since 8190/876 has held till now the bullish count is still valid. If we are in the bearish count we should drop hard on Monday or on Tuesday. So I think I'll do a short term update after I'll know which count is the correct one.

break and retest

It is quite difficult to label the waves since the top at 930 but I see two possible counts:

bearish count (favourite)

Today's action can be counted as a wave ii of (iii). If we are in wave (iii) down we should drop hard tomorrow or on Monday (~50 points).

bullish count

We finished wave 4 of (C) yesterday @ 880 and started wave 5 of (C) today. A possible target for wave 5 is the declining SMA200 (currently at 947).

This count is valid as long as 8190/876 holds.

Nice breaks and retests the last few days : ) let's break the last uptrend line:

two possibilities

Although the SPX lost over 2% it's still possible that we'll see new highs this week before the correction should start.

Let's take a closer look to the two counts:

Bearish scenario (blue):

I labeled today's gap down as a wave (i) and the rest of the day as a wave (ii). Wave (iii) should follow tomorrow and break all these support lines.

Bullish scenario (orange):

We are still in wave 4 (flat). Wave 5 of (C) should start tomorrow and make new highs later this week.

(don't take the steep lines next Monday too seriously : D)

The top should be near

After two busy weeks I found time to write a new update : )

review

The market decided to go up instead of down... : ) My count became void on the 28th of April after 862 was breached.  I sold all my puts at that level with 9 points loss (853=>862).

forecast

We are now in the last upleg of the current rally. Wave 5 of (C) should end soon since we are right below some heavy resistances: There is the January high at 944, the SMA 200 at 955 and the 38.2% retracement of wave 3 at 961. I expect the market not to surpass this levels.

After the market will have topped out between 930 and 960 we should see at least a 38% correction of the entire up move. A break of 900 will confirm that this rally is over. 

wave 4 or Primary B?

As long as we don't correct more than 62% of the rally from 667 to 9xx I expect us to be in Primary B and we should see higher highs in the summer.

If we drop below the 62% retracement we'll likely be in Wave 5 of A/1 and should make slightly lower lows in the summer.