Wave Principle

2/9/12 - EOD Update

2012-02-09T13:38:00.000-08:00

There's no denying that this rally is getting long in the tooth and the fact that this looks good as a wedge. The question is what stage is it in if this is an ED?

30 Min

I like the fact that whether you count this entire structure as 9 waves or 13, they both assume the same thing, there should be one more leg up.

If 13 waves, one more is needed since I see 12 waves into the close. If counting this as 9 waves, notice that the wave structure after wave [8] can be treated as one last wave as an ED to complete 9 waves?

5th ED

Here's the option looking for one more wave up. See below though should we see selling right out of the gate tomorrow.

ED Complete

This could technically be considered complete. Until it breaks down below the lower TL, lets go with the above.

ES may be looking for 1 more push up to towards the 1353-1362 zone.

2/8/12 - EOD Update [10:20 PM Update]

2012-02-08T21:41:00.000-08:00

[10:20 PM Update]

ES appears to be targeting 1355 as well if the triangle plays out.

EOD Update

I don't have access to my StrategyDesk charts so I had to replicate the 30 min chart on TOS. I missed most of the action today due to travel but it appears the market bounced off the proposed ED TL.

I made a slight adjustment to last night's chart. The bottom line here, it looks like the market has one more push higher to complete either [9] waves, complete 5 gray waves or complete 5 blue waves that form an ED to complete the entire structure off the 1/30 low.

Note the alternate option I have there where waves 4 gray or blue may be yet another flat and if not, it appears the Golden Section target just may be met.

Please also note the ED option limits wave 5 to 1357 or else it will be longer than wave 3.

I am on vacation so my updates will either be late or brief. I'll try to drop in the CiL early but will only be for a short while.

GLTA!

2/7/12 - EOD Update

2012-02-07T14:08:00.000-08:00

Looks like the market is still progressing higher. The sell off at the open capped a near perfect flat from which the market rallied higher in an impulsive fashion.

SPX - 30 Min

I'm still watching the 1355-1360 level. I'm still eyeing a few options on the 30 min chart above.

1. The red labels highlight a nine wave extension, which requires one more push up. The golden section target would be a nice place to stop.
2. The blue labels is looking at the completion of wave 5 blue.
a. Either it targets 5=.618x1 at 1350 or wave 5 blue extends to 1360 where wave 5 = 1.
3. The green labels suggest an ending diagonal for this final wave.

Now once we figure out the end of this wave, where are we? See the two 60 min charts below.

The DOW Jones Industrials printed a new high above the 5/2/11 high. So will SPX follow? If so, 1370 would be something to keep an eye on.

SPX - 60 min - Primary

SPX - 60 Min - Alternate

DJI

2/6/12 - EOD Update [8:09 PM Update - Golden Section Target]

2012-02-06T13:49:00.000-08:00

[8:09 PM Update - Golden Section Target]

I added some more Fib extensions for each count option. There is a confluence at 1355 and note where the blue label extends to if 5=1 and if 5=1.618x1.

[5:30 PM Update - Golden Section Target]

SPX - 30 Min -

Most of my readers have seen this technique before. I'm still unsure of its success rate but thought I'd present it yet again.

See here for more on this.

Golden Section - Wave 5 Extended

EOD Update

SPX 30 Min

I believe the market may have setup a gap and go situation for tomorrow per the blue labels. If that does not occur first thing, I'm watching for a potential ED to complete this wave up since 1/30/12.

Notice the Fib confluence 1360. May be a target.

Earlier I had a wave iv triangle label on the chart. I removed it for now so as not to clutter (isn't it cluttered enough?) the chart any further. Should the market triangulate here we'll bring it back.

Pattern-wise this does still look like a bearish rising wedge off the early AM sell off.

This is all I have for today. Just trying to figure out if this puppy is extending or will be ending soon.

2/4/12 - Weekend Thoughts

2012-02-04T07:43:00.000-08:00

Here's an update on a collection of longer term charts I have been tracking. Based on my interpretation, the bulls are still looking good. However, bulls should be keeping an eye on some near term resistance.

Have a great weekend!

SPX - PRIMARY DAILY

Intermediate (B) has met the minimum 90% retracement of (A). However, as you will see below, the bullish alternate is certainly worth watching.

SPX - WEEKLY

A large cup and handle / inverted head and shoulders I have been tracking. Bulls may be taking a stab at the upper edge of the rim at 1370.

SPX - 3 PUSH PATTERN

A 3 push pattern I continue to track. Notice the channels and trendlines that have been overcome by the bulls.

SPX - MONTLY BOLLINGER BANDS

A montly MACD bulls cross and upper BB at 1421.

SPX - LT CHANNEL

More channels.

DJI-

The Industrials are just 13.77 points away from matching the 5/2011 high.

NDX

The Nasdaq 100 is leading the way.

2/3/12 - EOD Update

2012-02-03T15:34:00.000-08:00

Don't you just love it when the primary plan comes together? Near the open, I tweeted that I was watching 1345 today and sure enough the market aimed right for this level.

I think the top is in or very close to being in. However, which top do I think it is?

We will continue to work with the primary daily chart so please refer to it below. I eliminated alternate 2, the triangle, so now we just have to work with the primary and alternate 1 for now.

On the 30 min below, I do note the possibility that wave 3 of 5 is still extending so we will need to keep an eye on that.

SPX 5 - Min

I see five waves up.

SPX - 30 Min

Five waves up but the tricky thing with extensions is that she can go on and on. MACD is rolling over so we'll see how much of a pullback results from this.

Primary - Daily

Per this count, subminuette 3 is nearly complete and once it is, subminuette 4 will attempt to backtest the 1333 level.

Alternate - Daily

This count has minute [c]/[3] in and minute [4] is in progress or will start shortly and most likely retrace back towards the 50/200 day SMA. This count requires [4] to stay above [a]/[1] at 1267.06 to remain valid.

I'll post more long term charts over the weekend if I have time. Just a reminder, the monthly MACD bull crossed recently so this is something to consider.

Have a great weekend!

2/3/12 - Pre Market

2012-02-03T05:54:00.000-08:00

So far the market likes the 234,000 jobs created in January. This was well above the 121k expectation.

Now will this mark the top of the rally that began on 12/19? Keep an eye on all three of my counts I have been showing you all here.

The market may take a break after today but it may be shallow, should this leg off 12/19 complete today.

Don't forget, should this hold into the open, the market will gap over the longer term TL.

2/2/12 - EOD Update

2012-02-02T13:56:00.000-08:00

Not much to add to today's action. The primary is still looking for a wave 5 to complete near term and that would cap the end of a 3rd wave.

SPX - 5 Min

Will we see wave 5 complete tomorrow? If so, per the primary 60 min below, that would conclude the third wave of minute [c]/[3].

SPX - 30 Min

Here's a simplified view of the 30 minute an the options.

SPX - Primary

I think the market is still waiting to show her hand here and this makes it difficult to determine which count works best between the primary, alternate 1 and 2.

I'll stick with the primary until proven otherwise but again alternate 1 and 2 are strong contenders.

SPX - Alternate 1

This option coincides with the 5 min primary since it is also seeking an end to wave 5 of minute [c]/[3].

SPX - Alternate 2

Because I have been suspecting a choppy range bound market, this option also works very well.

At the end of the day, we can "what if" things to death. So all we can do is go with the primary until rules are broken rendering the count invalid.

2/1/12 - EOD Update

2012-02-01T20:38:00.000-08:00

SPX - 5 Min

The bulls hung onto most of the gains today and put in what I believe to be a third wave. The key question now is what third wave does this represent?

I believe a double zigzag completed into the close as a wxy. I have a potential bearish setup but until 1321.41 breaks, the double zigzag is the primary count down off today's high.

The more bullish option is a nested 1-2 i-ii up.

The 30 min chart again highlights the three best options I'm tracking right now. Notice if this is a flat in progress, wave B has now met the minimum 90% retracement target of wave A. If this is playing out, wave C is free to drop down towards the wave A low and even further if it wants to expand.

If the red option is to remain alive, 1321.41 is the key level the bulls need to hold to avoid a 4-1 overlap.

SPX - 30 Min

2/1/12 - Pre Market [7:34 AM Update]

2012-02-01T05:49:00.000-08:00

[7:34 AM Update]

All options are still on the table, especially the complex corrective blue option since wave X has hit a 78.6% retracement and the subwaves a and c of X = one another.

I favor the red and green option at the moment though. Lets see if 1320 holds on a pull back.

Pre Market

Looks like a positive start for February. Here's a nice channel ES is respecting.

I hope yesterday's EOD Post was simple enough to follow.

1/31/12 - EOD Update

2012-01-31T14:30:00.000-08:00

The bulls reversed the bears yesterday and the bears returned the favor today. Short term, its still a little unclear where the market wants to go.

This is what I wrote in last Friday's EOD Update, "If the market is truly in a wave 4, prepare to see whipsaws in the market (think flats and triangles) until it completes since we may witnesses multiple corrective waves (three wave structures) up and down as the market consolidates the most recent gains. "

I still believe the market is still trying to chop out a wave 4. The question is what degree. Please refer to my count options (primary, alternate 1 and alternate2) from yesterday's EOD post for the bigger picture.

As for the very near term my primary view is below on the 5 min.

One thing to note is the fact that the daily MACD crossed down today but the bulls got their golden cross.

SPX - 5 min

Until this count is ruled out, we'll give it the benefit of the doubt. I'm looking for a wave iii green out of the gate tomorrow to help complete a larger degree 3rd wave that will either represent wave 3 of 5 or wave 3 of a larger degree B wave.

Please refer to the 30 min chart below for the near term scenarios if the market continue to chop.

SPX - 30 Min

Based on the three options available, 2 point higher to challenge 1320 at least. The third option is looking for a move below 1300. So long as 1300 holds, option red and green are the ones to watch.

SPX - 60 Min

An hourly MACD buy signal confirmed and a close above the 20 SMA makes me think the flat/tri scenario may play out.

1/30/12 - EOD Update

2012-01-30T16:07:00.000-08:00

I knew I should have left well alone when I posted the bullish 5 min chart yesterday. The bearish option I added to Friday's EOD post played out almost near perfect.

Today's drop even had wave 3/c nearly = 1/a. So far I see an attempt by the market to form five waves up and a more bullish option is the nested 1-2 up.

I still believe the market is continuing to chop out another wave 4 or completed another wave 4 at today's low. Its the degree of this wave 4 that is currently the challenge to identify.

Once again my 60 min primary, alternate 1 and alternate 2 still apply.

SPX 5 Min

Primary

Is wave 4 red complete?

Alternate 1

Is wave 4 blue complete?

Alternate 2

Is a flat playing out for wave 4?

1/29/12 - 5 Min Update

2012-01-29T22:15:00.000-08:00

SPX - 5 Min

I just had a chance to look at the squiggles on my 5 min chart and notice there there are five legitimate waves up. So I have made my adjustment to this count.

I have the wave i high at 1314.43 and the wave iv low at 1314.4399 so there is technically no wave 4-1 overlap.

This count sets the market up for at least a third leg up to challenge at minimum 1325 even if this were to only be a corrective bounce up.

ES does not point to a bounce at the moment but there are several hours before the open. We shall see soon.

1/29/12 - Long Term DOW and SPX

2012-01-29T07:25:00.000-08:00

DOW

Here's an updated look at the long term DOW chart I've been tracking. Anyone notice/mention the monthly MACD buy signal?

That may just be hinting that the move will either continue to hit the top of the expanding diagonal trendline or continue on in a new bull market to complete Grand Super Cycle 5.

Notice the mid channel is at approximately 14000.

SPX

Should the SPX follow.

1/27/12 - EOD Update - Golden Cross Imminent [5:42 PM Update]

2012-01-27T14:53:00.000-08:00

[5:42 PM Update]

We must not forget about a move that is potentially more bearish.

SPX 3 Min

SPX - 60 Min H/S

EOD Update

The bulls have defended 1315 for a second day and continues to channel up. The primary 5 min chart shows the sell off from the 1/26 high as a corrective count.

I shuffled the primary and alternate counts I have been tracking and have reordered them below. Note they are all looking for a wave 4 to complete at various degrees. Currently the market's bounce off today's low was the beginning of wave b of 4.

I believe all three may have wave b retrace back to the 10/07 - 5/11 TL above.

If the market is truly in a wave 4, prepare to see whipsaws in the market (think flats and triangles) until it completes since we may witnesses multiple corrective waves (three wave structures) up and down as the market consolidates the most recent gains.

SPX -5 min

Primary

It is possible wave 4 red is a running flat. A new high next week will certainly confirm this option.

Alternate 1

Alternate 2

1/26/12 - EOD Update

2012-01-26T22:58:00.000-08:00

Another late post for me. Last night I speculated that wave 3 was complete but that an over-throw could occur due to the 60 min MACD buy signal. Well, looks like that happened today.

SPX - Primary

I believe wave a of 4 most likely completed today and that wave b should be expected next to test the bottom of the channel.

SPX - Alternate

I like this as the alternate.

1/26/12 - Pre Market

2012-01-26T05:59:00.000-08:00

SPX - 60 Min Alternate 2

Another gap at the open. We have to consider the extension possibilities until the up channel breaks.

Watching the red channel.

1/25/12 - EOD Update

2012-01-25T23:43:00.000-08:00

Late post for me. The market reacted favorably to the FOMC announcement.

SPX - 60 Min Channel

Just this channel hit alone, coupled with a long term TL hit, would make you think this move is complete. However, what we have going now is a confirmed MACD buy signal, so we'll have to watch if there is some more upside to come near 1340.

SPX - Primary Option

The primary count may have wave 3 complete. This lines up well with the channel chart above. But again, one must keep in mind that the MACD buy signal may allow for a throw-over of the channel.

SPX - Alternate

The alternate, which I do like and may favor more than the primary, is looking for 3=1 at 1347. We shall see.

SPX - Corrective Option

The thing about EW is that though you may have some decent options to work with, you can also rule em out when they are no longer valid. Back to the primary and alternate cout and without fail, we will continue to look for the next alternate to work with.

1/25/12 - Pre Market [7:52 AM Update]

2012-01-25T06:26:00.001-08:00

[7:52 AM Update]

All speculation but looking for a possible ED for this last corrective wave down or a (b) wave triangle before a final (c) wave down.

Pre Market

ES may be hinting at one pattern I'm watching my primary count to form

1/24/12 - EOD Update

2012-01-24T14:22:00.000-08:00

With Apple's ER release and assuming the AH rally continues into the open, my primary and alternate counts are still looking pretty good.

SPX - 60 Min

Early at the open today I presented this chart and kept an eye on the mid - channel on the initial selling. It found support and slowly crawled up the rest of the day.

In keeping things simple, price is still heading up in the channel.

SPX - 5 Min

Once again this 5 min chart works with both the primary and alternate count. I'm expecting a minimum of one more push higher in either a wave c or wave iii.

We'll have to monitor the wave structure as it approaches the next logical Fibo retracement levels above.

SPX - Primary

Based on this primary, I'm thinking wave 4 blue may be attempting to triangulate or form a flat. Either pattern requires a wave b retracement towards 62-90%.

SPX - Alternate

Based on this count, wave 4 red completed on today's early selling and bounced at the lower TL. Should tomorrow gap and go, that would be wave 3 (degree still TBD) up working towards completing wave 3 blue.

SPX - Corrective

This count is still legit and the bear's best hope is a nested 1-2 i-ii down started over the past two days. The only concern I have with this count is the fact that a drop out of a diagonal should be sharp and so far this has strugggled to find any acceleration down.

VIX - Daily

One thing the bears have going for them is the VIX equity sell signal was confirmed today with the higher close after closing back in the Bollinger Band.

Lets see what happens tomorrow into FOMC and the market's reaction to Apple.

1/24/12 - [7:51 AM Update]

2012-01-24T05:29:00.000-08:00

[7:51 AM Update]

here is my 5 min view for today.

http://twitpic.com/8b66op

so far a 4-1 overlap so no new impulse down yet. this could have completed wave 4 red of my alternate

http://twitpic.com/8b62e6

and could have complete wave a of a flat or wave a of a triangle forming for 4 blue of my primary

http://twitpic.com/8b63ca

Pre Market

ES - 60 Min

Backtesting the TL.

ES - 15 Min

MACD +ve divergence and taking on a falling wedge pattern.

1/23/12 - EOD Update [2:24 PM Update]

2012-01-23T13:18:00.000-08:00

[2:24 PM Update]

Here's a StrategyDesk version of my corrective flat count based on the Primary daily chart. Notice that in order to qualify as a flat, wave B must retrace A by 90%.

A 90% retracement of wave A takes the market back to 1340, which so happens to be a Fib extension of 1.272 if [c]/[3] = 1.272*[a]/[1]. The market has already surpassed [c]/[3] = [a]/[1].

So lets keep an eye out for this count should the market continue to rally. Of course the bullish alternate is that this is in fact a wave [3] up of wave 3 green.

EOD Update

Unfortunately the near term wave counts were unclear into the close. See the 3 min chart below.

The VIX just closed back inside its Bollinger Band so something to watch for tomorrow. However, the SPX did manage to crawl back over the trendline it has been riding above since Dec 21, 2011.

SPX - 3 Min

This count here supports both the primary and alternate options below.

If the primary is in play, wave a of 4 completed at today's low. The bounce thereafter, has done so and complete three waves up with c of b=a of b right into the close and hit the 62% retracement mark. Tomorrow we should then expect a drop down for wave c of 4 towards the 1305 level if c of 4 = a of 4.

Note the option I have on the primary. This could be a triangle in the works for wave 4 blue. Lets keep an eye on the lower Tri TL should there be a shallow drop tomorrow that does not take out today's low.

As for the alternate, which I have labeled Primary Option 2, today's drop completed wave 4 red and now wave 5 red of 3 blue is in progress with a gap and go tomorrow.

I can see wave 3 blue completing near the underside of the trendline (~1330) that started from 10/11/07.

SPX - Primary

SPX- Alternate

VIX - Daily

Should the VIX close higher than today's close, an equity sell signal will be confirmed. I'm curious if the VIX will reverse sharply tomorrow because the daily MACD is on the verge of a cross down so I'm thinking this may still favor the alternate SPX count.

1/20/12 - EOD Update

2012-01-20T14:47:00.000-08:00

SPX - Alternate

Haven't had time this weekend to add commentary to the charts but they should speak for themselves.

This is an alternate I'm watching should this wave continue to extend.

SPX- Primary

SPX - 15 Min Primary

SPX Daily TL

INDU

VIX

Golden Cross

2012-01-19T21:15:00.000-08:00

I haven't heard/read anyone mention the golden cross for the DJI. More importantly from a wave perspective, the DJI has now retraced the 5/11-10/11 leg down 90%.

This sets up the market for at least a flat if the more bullish scenario is not playing out. The DJI is leading my primary daily count , which I suspect is trying to do the same thing at minimum.

DOW JONES

1/19/12 - EOD Update

2012-01-19T14:47:00.000-08:00

My first target range has been met at 1310-1315. Now it is up to the bears to smack this down or else this opens the door up to 1330-1340.

I'll be keeping an eye out for a wave 4 pull back. Some targets would be 1295 and 1282.

SPX - 5 Min

The majority of folks do not like to count the squiggles. I, on the other hand, enjoy it but sometimes you gotta just let the market run if it is extending. This is a very good possibility here should the market run for 1330. ** See the bullish option below for this extended count.

As of right now, I believe there are enough waves to complete wave 3 blue (see 60 min primary impulse below).

The pullback off the day's high is channeling lower but doing so in a corrective fashion. This would be consistent with what I'm expecting for a wave 4.

However, if a new high is made tomorrow, we'll just have to mark today's lil pull back as another wave 4 within a larger extending third wave.

SPX - 15 Min

SPX - 60 Min - Primary Impulse

Wave 3 blue is complete or pretty close.

SPX - Bullish Option Alternate

This is something to consider should this leg extend higher. I believe this is a good count contender.

SPX - Primary Daily

Note the wave [c]/[3] target if it equals wave [a]\[1].

Why I think 1330 will be tagged if the market pushes past 1315.

SPX - Primary Corrective

The previous version of this ED count was ruled out today when the market climbed higher since wave (v) in that old count is longer than (iii).

This would be another version and will be voided if 1326 is breached since (v) would be > (iii).