Some Interesting Charts

There are a lot of mixed signals out there currently. Some indexes are showing bullish counts, while the others suggest a bearish wave count may be forming. It is really hard to tell which way we will go because there is just so much out there. But I'm going to post some options, and we'll see which one we follow.

First count: Bearish.
This count suggests that the SPX topped last Thursday at 1150, and we are starting a down trend. We have come down in 5 waves, so at best, we can count on 5 more down waves coming after a small retrace.

As you can see from that chart, I have drawn a lot of Fibonacci lines. For now, my target will be a small bounce back to 1140-1142 to complete wave (ii) before starting wave (iii) down. The alternate for that chart is that wave (ii) already ended, and Tuesday we will break down.

Second count: Bullish.
This count is on the Nasdaq. It suggests that we have more highs still to come.

As you can see from that chart, we complete Minor Wave A and B, and we are currently in Minor Wave C. So far, I can only count 4 Minute waves complete. If this count is right, then wave [v] is still to come. If the Nasdaq rallies, it will probably take the Dow and SPX with it. I actually support this count more than my other ones. All the waves line up so perfectly. It looks like it's been taken out of an Elliott Wave Textbook...

Third Count: Bearish.
This count also suggests that the top is in.

As you can see from this chart, we have completed a Triple ZigZag corrective up wave after 5 waves down. We also topped on the day of the 61.8% time retracement day. How perfect is that?

So really there are a lot of possibilities still out there. It will be best to closely pay attention to the short term wave counts in these coming days. If we start to clearly break down, we could go lower.

Aside from Elliott Wave... This Dow chart is very interesting. If infact we have topped, we will have to break out of the wedge shown there.

And as you can see, the red circles I've drawn on there are previous support and resistance levels. They also happen to line up perfectly with some Fib numbers connecting the March 2009 lows to the recent highs last week. Also, each red line is support. So you can see that if in fact we do break out of the wedge, there is a lot of support underneath us. Also note that all of the Moving Averages are firmly facing upward.

The VIX is almost at levels not seen in nearly 20 months! It almost is at levels seen in October 2007, when the markets topped. There is absolultely NO fear out there. Markets being this complacent is a bad sign. Look for the VIX to spike sharply if the SPX goes down.

It will also be important to watch how the futures trade on Monday. Also, once volume starts to pick up again, we need to see big down volume ratio before we can expect more down side. I will update on the volume ratio if it's very bullish or bearish. Good luck next week!