There was a SPY 5min volume spike over several bars on the slight new low. Probable bounce. SPX could still be forming a flat (expanded/irregular now) with an impulsive C wave back near 1150 +/- into OPEX, but that's just for mental preparation since the ultimate direction is down and jittery.
(Update Thu 8/18/2011 1:15PM EST)
Slight relative SPY volume surge on the latest trip down to 1140. Maybe we'll get a 1-2 hr bounce since things have quieted down a bit. Calm before the storm? For future reference, a large DIA volume surge called the top at SPX 1150 even though DIA has much less volume/weight than SPY and the surge wasn't even partly matched in SPY. Possibly, SPY ended an LDT wave A at 1150 with a C wave projected to 1150-1160 into end of day, but, whether or not SPX rallies one more time, nothing suggests to me that we won't make lower lows other than maybe a brief OPEX pause. Good luck.
(Update Thu 8/18/2011 11:50AM EST)
FYI...I plan to reload 75-100% short at 1151-1157 or possibly higher if I don't see volume ramp up in that price area. If I'm that lucky, that should improve my position by 5-10pts+ from this morning and I'll trade around 25% or so of that position if SPX looks like it will go higher in triangle wave c of 4. There is at least a 1 in 3 chance chance that the next drop will be a 1.5-2x multiple of today's 60pt drop and probably 1 in 2 if SPX reaches 1160+. Things are moving quickly. Fear is like a snowball. Play at your own risk. Good luck.
(Update Thu 8/18/2011 11:15AM EST)
Looking like a wave B/X flat from 1146 to 1139 in which case the textbook target for C/Y is 1151-1152 or the mini rally would likely be over if SPX drops below 1137. Any rally above the 1157 Fib is not likely a wave 4...no volume clues yet but I'm watching that and Dynamic RSI (5min RSI20-30 or 15min RSI6-10).
(Update Thu 8/18/2011 10:55AM EST)
Tricky now. I think we can safely say 1134 ended a wave down 2.5x the length of 1208-->1184. The key Fib retracement levels are 1148/1157/1164/1171. From 1208, do we have a 123, ABC or 121? A wave 4 after a 123 should fail at the lower Fibs whereas a triangle leg up or a nested wave 2 could reach 1164-1171+. The depth of today's drop and all of the counts I just mentioned really open up the likelihood that 1070-1080 is a minimum target with 1011-1019 likely, but we'll play it by ear. If today's SPX bounce fails at 1145-1160, the triangle scenario is likely eliminated, and we'll be looking for signs of a 12345 vs 12123. There is a good shot SPX will hit the early side of my time targets and the low side of my price targets, so be careful.
(Update Thu 8/18/2011 10:40AM EST)
New chart below.
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In case you missed it, I made a new post last night. I'm going to take the advice of one of the members and make new posts for each update unless the update is really small or within minutes after the original post.
The next large downleg has almost certainly started. Of course, there is a slim possibility that 3 waves completed from 1371 to 1102 at the 38.2% retracement of the entire bull market like we saw in summer 2010 in which case the current drop is a buying opportunity.. However, Dynamic RSI told us at the 1174 low a few days ago that the rally from 1102 was likely not impulsive and that was confirmed with 3-4 more days of chop. The abcXabcXabc triple zigzag count is the likely winner for 1102-->1208. Dynamic RSI also told us to expect some RSI resistance zones to be reached, and they were either touched or nearly touched as I had them charted. The historical TRIN and crash stats told us to expect a high around Fri-Wed which I charted. Tuesday's NYAD triple top and extreme TICK told us the high was likely within a day or so. History suggested VIX would approach but not pierce its 20dSMA if there were 2 more serious downlegs remaining, and VIX has done exactly that. The System just got its 2nd sell signal in the last 2 days at 1187 with short entry at 1193. A wave 4 retracement of 1347-->1102 as counted by Dynamic RSI as well as the crash stats expected a 34-50% retracement to 1185-1225, Fib/pivot convergence expected a retracement to 1190-1200 or 1220-1233 and my experience favored a touch of the 89hEMA. So, all the pieces of the So far, SPX topped at 1208 on Wednesday with a pierce of the 89hEMA just above 1200 where w4=w2*2. You have to admit the analysis was about as spot-on as you can get a week in advance, but I'm the first to admit it doesn't usually work that good.
Where will SPX go from here? I maintain 3 price target areas based on Fibs, pivots, price-volume congestion and bear market markers all of which I detailed recently. We are likely to hit at least the first 2 targets.
1. 1080-1120
2. 1011-1019ish
3. 930-950ish
I also maintain 2 likely low time frames with the 2nd possibly being a higher low.
1. September 7th +/- 10 days
2. early October
I should be able to narrow those targets a little bit as they approach, but, assuming they play out, you can't get much better than that unless you have an operational crystal ball. As I charted recently, the question for me is whether or not SPX forms a triangle pattern for a week for the current wave 4 before dropping to 1080/1020. If a triangle is playing out, the general rule is for a 61.8% zigzag retrace of 1102-->1208 to 1142, so, if you see an ABC to 1132-1152, there's a chance for a nice rebound back to 1170-1190. A wave 2 of 5 can make the same retrace though, so it's key to determine if the first major drop is 3 waves or 5 waves. I'll mainly be using Dynamic RSI for that. Once SPX falls below 1130 and especially 1118, the odds are against a triangle. Partly based on several huge volume SPY 5min volume bars between 9:30 and 10AM, I took a partial profit at 1153 and again at 1139 and will reload 100% after a decent bounce based on volume, Fibs etc.
2 or 3 months ago, I proposed that the Shanghai Composite index was breaking down out of a multi-year triangle. It now appears to be in a wave 3, which if it has any influence on SPX, should drive SPX to one or both of my lower 2 targets. Good luck.
S2, I appreciate all of your postings and the great information that you share with us. I have a request please. I followed your short signal on Tuesday and then the stop signal on Wednesday. I wanted to short again, so I watched your blog very closely yesterday. But you posted the 2nd short entry signal after the market was closed yesterday. I'm waiting to get my position back on, so I'd really like to know when you put back on your position. Please let us know quickly as soon as you decide to put your other position back on or maybe as you anticipate putting it back on. It would be greatly appreciated! Thanks!
ReplyDeletesure. sorry about not posting that until after the close. I noticed that 2 candles were broken as I evaluated the close. For future reference, when SPX is not in a bullish configuration (above all key MAs early in its cycle) and is in a daily downtrend (3-candle rule) and/or late in a cycle, I will use a 2-candle re-entry and 4-candle exit. In more questionable situations or neutral state, I will use a 4-candle entry and exit. The System also allows .25% leeway in certain situations like recent reversals. I should have stretched my stop from 1208 to maybe 1210 due to the 89hSMA but I stuck with .25% + rounding up as usual. I am allowed to stretch stops to key MAs.
ReplyDeleteI suspect you will get another entry point on Friday. Once again, sorry, I have a day job and can't post everything real-time. I did mention that I stayed personally short with specific reasons when the System stopped out. Good luck.
I understand that you have a day job. No problem. That's why I specifically posted my question, to let you know that at least one person out here is paying REALLY close attention to your posts! I know that you said you were staying short yesterday, but I followed the system since you've said many times how your gut is often wrong and you should've just followed the system. :) So I'm trying to. Anyway, you're information is great. And like I said, if you know you'll be busy but are anticipating making a trade at XXXX price, letting us know ahead of time would be awesome. :) Thanks S2!
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