(Update Mon 9/12/11 3:15PM EST)
SPX rallied to 1150 eliminating disfavored option #3. Regardless of any of the intraday counts I can come up with, it appears that an SPX break of 1136 would now trigger the heart of wave 3 of 5 of 3/C from 1371. However, there are multiple Fibs and pivots at 1155-1165 and possibly a missing C wave, so we could get one more rally to 1155-1165 with possible spillover. I'll go back to 100% short at 1151-1157 or at 1136
P.S. I might also reload to 100% short if SPX fails at 1150 again since that is a backtest of the broken uptrend line (1102-->1121-->1140-->1148) and fits bearish option #1 below.
(Update Mon 9/12/11 2:20PM EST)
I think I'd go (more) stir crazy if I tried to be a day-trader moving in and out of new positions multiple times per day, but I suppose I could come up with a system somewhat like I do at the daily/hourly level. The last low in SPX and Dow broke an EDT rule for the wedge I was looking at. The effect is almost the same anyway in that SPX is attempting to rally from just below 1140. However, I now see 3 distinct possibilities.
1. SPX formed an LDT from 1151-->1136 as yet another wave 1 with nested wave 2 underway. This is not true if 1136 or 1151 is broken. Easy to identify.
2. SPX formed a rule-breaking wedge or 4-5-4-5-4-5 low at 1136. This is not true if 1136 is broken and it should easily break 1151 and probably 1157+.
3. The apparent SPX wedge from 1157/1151 is actually a descending series of 1-2-1-2-1-2s in which case all heck is about to break loose below 1136 and 1142.92 should not be broken.
So, we have lines in the sand at 1143 and 1151 on the upside and 1136 on the downside. Sure, there are probably other possibilities, but this helps me re-position my shorts. I will either go fully short again at 1136.06 or I'll look to reload at 1143+. I tend to favor #1 or #2.
(Update Mon 9/12/11 1:40PM EST)
Key moment here with SPX at
1138. Wedge with rally to 1158+? Or breakdown with 1140 as resistance?
Not sure. We should know within the next hour. As strange as it sounds,
the more bearish count would see a weak bounce to 1158-1175 as described
below. But, we're getting nit-picky here. The greater trend and risk is
down for the next week.
BTW, Friday's high TRIN and
Friday's NYADV small change at a bearish extreme made a bounce/reversal
likely today. In my subjective estimation, when SPX has a small up or
small down day after such an occurrence especially when the day is
choppy, it portends further downside within the next few days 2 out of 3
times. That does not preclude a rally at the end of today or into
tomorrow, but it does continue to give me technical comfort in my
projections. I'll get a little worried if SPX rallies to 1175-1180+ OR
if SPX breaks down to 1120-1130 on extremely oversold indicators and
then rallies hard above 1140-1150 again.
(Update Mon 9/12/11 1:40PM EST)
Key moment here with SPX at 1138. Wedge with rally to 1158+? Or breakdown with 1140 as resistance? Not sure. Should know within the next hour. As strange as it sounds, the more bearish count would see a weak bounce to 1158-1175 as described below. But, we're getting nit-picky here. The greater trend and risk is down for the next week.
(Update Mon 9/12/11 12:25PM EST)
Dow looks like a possible intraday sideways triangle since it has not made a lower low like SPX. Those usually appear in wave 4s, so even if it breaks down, it may only coincide with an SPX wedge to 1140ish. Or, what likes like a triangle can become a series of abc or 1212 waves for a further rally. Tough call. But, these are intraday musings which are more subject to being wrong and don't change the big picture. If 1140 becomes resistance, watch out below. If SPX rallies above the last intraday high of 1151, I'd expect my intraday wave 2 scenario to play out as described below. Good luck.
(Update Mon 9/12/11 11:30AM EST)
SPX made another lower low to 1141.53 but is bouncing again. My blue count on the 15min projection chart called for 2 more mini wave 5 lows and we got that today. A wedge with one more slight low is not out of the question. The red count looks less likely now. It could be in play if SPX continues down to 1130 today, and it will be officially eliminated if SPX rallies to 1158+ today. I updated the 15min chart. It's worth noting that my larger preferred count on the daily chart has SPX in the beginning of wave 3 of 5 of 3/C from 1371. The blue 15min count merely provides a potential detailed path for that wave, but don't let that change your overall position too much. Unfortunately for the average investor, the blue count was the most bearish option even though it gives hope to bulls that stops at 1136/1140 will not be triggered and another rally to 1231+ will ensue. I'll have an even better idea after I see whether today's bounce fails or not.
If 1204.40-->1141.53 (=63pts) was 1 of 3 of 5 of 3/C from 1371, then a weaker wave 2 should stop at 1158-1175 as I supported earlier. From there, wave 3 of 3 should be >63pts and likely 75-125pts. That makes our primary target of 1080-1100 a near certainty. Then, SPX should make two more lower lows after that. Given all the points I described below including all the congestion at 1100-1200 (with bear flag, H&S, massive price-volume support etc), it is HIGHLY unlikely that 1080-1100 will hold as a double or triple bottom. It is more likely that each low will hit our support levels of 1080-1100, 1057ish and 1000-1020 or possibly we'd see a double bottom at 1057ish or 1000-1020.
Personally, my most recent swing position was opened at an average of 1187 and I've been trading around that for the past week. I've expressed interest in going long at the SPX low expected over the next week, and that is still my plan. But, as the evidence has unfolded, I'm less and less convinced that 1080-1100 will hold and I don't want to risk a drawdown to 1000. So, I will not start any long position until at least sub-1060 and most likely sub-1030 unless SPX forms a possible bottom above those levels, rallies hard to break the bearish counts and then retraces 30-60% of the bottom. There is a small risk that SPX will drop to 900-950, so even an average long position from 1020ish has significant risk. In that case, I'd stop out around 990, possibly go short for a 4-8% ride lower depending on the situation and wait for a long re-entry. Anyway, until SPX breaks 1140 and 1121, the bulls are still technically alive albeit on a respiratory machine, so I am fully aware that my preferred projections can still fail, but we are close enough in price and time for me to figure out how I'll trade the probable paths. BTW, the DAX closed today exactly at the bottom of the freefall zone that I charted a week ago, but all other markets have plenty of room to fall to support. Good luck.
(Update Mon 9/12/11 10:30AM EST)
The System took 25% profit at
1143 and reloaded at 1153. The System will take 25% profit again if SPX
hits 1145 and reload at 1155. Since 1130-1135 was not reached, I
suspect SPX is forming a nested 2nd wave today although 1 more slight
new low to 1140ish is possible based on my squiggle counts. I'd expect a
weaker-than-normal wave 2 retracement of 38-50% of 1204-->1142ish =
1166-1173 and possibly even a top at Friday's pivots of 1158/1162, so
I'll use a wide range of 1158-1175. SPX actually almost touched 1158
this morning but it appeared very impulsive, so I'd expect at least one
more rally today. Since 1204-->1142 took less than 2 days, a weak
corrective rally need not take more than 2 hours to a day or so.
In any case, I'm expecting the heart of wave 3 of 5 of 3/C from
1371 to begin today or tomorrow. It seems likely that SPX will bounce
today from 1140-1142 to 1158+, but if 1140 becomes resistance (such as on a breakdown and backtest), wave 3 could already be underway. System resistance has dropped to 1158.14 but I'll give it .5% flexibility to
1165 and plan to re-enter soon if stopped out. Some people are looking
at 1140 and 1136 as key support. Others are looking at 1118-1121 and
1102. I've got a feeling the ball will get rolling swiftly downhill once
the first big bunch of stops are triggered at 1136-1140. Any government
intervention would have been likeliest over the weekend, and time is
running out for a low as described below, so this IS the week for bears
to make their wave 3 move if their going to do it. Bulls are hanging on
by a fingernail right now. Good luck.
_____________________________
Any person that reads the list below and buys into it can make
reasonable conclusions about SPX short-term. SPX should bottom in
the next 1-8 trading days with 1080-1100 and 1000-1020 being the
likeliest targets. An early October low also appears probable, but it's
likely to be a higher low unless SPX cannot catch a bid after the FOMC
meeting and makes a quick lower low around Sep 29-Oct 4.
Here are the key considerations from my perspective that lead me to those conclusions.
1. The System cycle is expecting "a" significant low by September 21st. It is not required to be a lower low but usually is while below key moving averages. See my public daily chart.
2. The System's unofficial mid-cycle low is expected on September 29th +/-, but it has been running a few days long, is not as consistent as the primary cycle and can be a higher low. See my public daily chart.
3. 4 longer term non-System cycles are projecting a low in the first half of October. 2 of them can be seen on my weekly chart, 1 can be seen in Terry Laundry's public chart list and 1 is a 17-week cycle used by some technicians.
4. Prior to August 2011, the previous 12 "crashes" as I've defined them since 1980 have led to a double crash (8-10%+ below the initial crash) 2 times and a retest/break of the low 11 times. That makes strong odds for sub-1102 and reasonable odds for a double crash to 1000-1020.
5. S2EW with DRSI favors a 4th wave conclusion at 1231 with high odds for a sub-1102 low and low odds for the 3rd alternate count to 1231+. See my public 60min and 15min charts.
6. The next FOMC meeting is September 20-21 with Operation Twist pretty much baked in the cake possibly in combination with some Obama Refi program.
7. The US Dollar appears to breaking out in a wave 3 upward which is when the most SPX damage is done in recent years, and this breakout is particularly serious since it is happening after a 16-month wedge formation into a 3-year cycle low with massively bearish sentiment.
8. ISEE, OEX p/c and other sentiment indexes suggest that "smart" traders are very bearish while others are neutral-to-slightly bearish.
9. Some daily indicators like TRIN are spiking to typical bottoming levels, while most others like stoch, macd, RSI, VIX, TICK moving averages and breadth worked off oversold extremes over the last few weeks and have plenty of room to get more oversold for possible positive divergences. See my public daily chart.
10. SPX is currently testing its recent uptrend line (1102-->1121-->1141-->1148) for the 4th time while being trapped below its old upper triangle line. The SPX uptrend line will reside around 1150 on Monday, and Dow has already broken its line. See my public 60min chart.
11. The last leg in the 11 downtrends greater than 8% since 2007 have lasted an average of 8.8 days at 1.34%/day with all but one ending in 14 days or less. From 1231, that gives you a minimum average projection of 1099 on Monday 9/12 to 1000 on Monday 9/19.
12. My consumer discretionary spending analyses (see my public weekly chart) projected a HUGE SPX low by September 19th although it's a small sample set from 2007 so another week or two is not completely out of the question. However, I've never seen a lower low after such a spending low is established until 7-8+ weeks of rally occurred first.
13. Price-volume support drops off sharply below SPX 1080-1100 until SPX 900 although there are significant Fibs and pivots around 1000-1020. See my public 3yr weekly chart - it shows suport down to 1050 but if you zoom in to lower levels you'll see 1050-1080 support weakens significantly. DAX is already in its price-volume 5% vacuum zone and numerous other markets (see my public cross-market chart) are still 4-6% above key support with price-volume air gaps another 5%+ lower.
14. September into October are seasonally weak months with horrible fundamental news on top of it.
15. The 2008 analogy (Oct/Nov 2008 vs Aug/Sep 2011) I've been tracking for the last few weeks has been playing out fabulously with only minor deviations, and it suggests a sub-1102 low this week followed by a final low the following week.
16. Pattern technicians will trade an SPX breakdown of 1140/1148 as a broken bear flag and/or H&S either of which project to 1000-1050. And, with a month-long trading range at 1100-1200ish, those don't usually breakout or breakdown weakly.
Using my
preferred S2EW count from the daily chart, I projected 3 possible detailed paths
over the next few days on my public 15min chart. If SPX gets above 1182
(which is the current System stop), a continued corrective rally to 1231+
could be in play as an alternate count but it does not fit the timing supported above. If SPX drops on Monday, we need to see if it breaks 1130. If so, SPX will be making its largest leg down since SPX 1204 and would thus likely be in the heart of wave 3 of 5 of 3/C from 1371. If not, SPX is likely finishing 1 of 3 of 5 of 3/C. I'd prefer to see SPX break 1130 on Monday because that would fit my timing and price projections best but we get what we get. Regardless, if SPX trades down to 1125-1135, I'll be looking to see if RSI makes a lower low favoring the heart of wave 3 count.
Good luck.
P.S. Consumer discretionary spending has rocketed so high, so fast in the last 3 months (http://www.consumerindexes.com/history.html) that August 2011 likely marked a spending pivot high. Since 2009, 5 such spending pivot highs have been followed by significant SPX highs 20-23 weeks later. Basically, that's 5 months from the end of August and would indicate a very significant SPX high in February 2012. However, the 2 spending pivot highs in 2007-2008 (as far as the spending data goes back) led to SPX highs 15-16 weeks later. That suggests an early December 2011 top as seen on my public weekly chart. It would appear that spending rallies lead SPX rallies by a shorter time period during bear market action. Given that my confirmation for a bear market has been met, I lean towards the early December 2011 SPX top. If September spending manages to make an equal or higher spending level than August, then the SPX top would likely extend to early January 2012. SPX is currently in the 5th month of a downtrend, so it is not unreasonable to expect a 3-4 month corrective retracement rally. After that, I think the 20-23 week period will come into play as a lower high in Feb/Mar 2012 followed by a massive wave 3 down. This is something to keep in mind as SPX makes a low in the short-term and as SPX rallies into end of year. At the end of each month, we can revisit this leading indicator to narrow the next multi-month targets.
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