Market Update - 7/30/2010

Despite wave 4 crossing into wave 1, we still had a pretty bullish day today. Once we had the overlap at 1088, I thought we would go much lower, but the exact opposite happened.

The best way I see this is to count this as an expanding diagonal. I personally hate having to change counts, but because of the reversal back up today, I have no choice.

If we had continued down, it would have made a nice impulse. But regardless, Monday will be very interesting.

1088 still remains the key pivot to the down side, and 1115 is the upside pivot. I will have more over the weekend.

Market Update - 7/29/2010

A pretty volatile day today. A pretty nice swing to the downside early today. The 1100 level was broken on the SPX, which I did not expect to happen. We found support at 1092. However, 1088 was not broken so the current count is still in play.

As long as 1088 hols, wave 4 and 1 will not overlap on the SPX. But we were really close to the limit today. If we get a similar down move tomorrow, Minor wave 2 may be over.

For now, the primary count is that this is minuette wave (v).

For the Nasdaq however, the situation is a little different. The overlap between wave 4 and 1 occured today. This is pretty bearish.

                           

The Nasdaq could still go higher, but I don't think it will make new highs. Watch for the Nasdaq to possibly lag to the upside and lead to the downside.

Market Update - 7/28/2010

Seems like minuette wave (iv) is playing out perfectly. Another choppy day with some downside corrective action. A perfect wave (iv).

There is a good chance that today wave (iv) could have ended at 1103. It looks like a decent wave (iv) on the charts. I don't think it should go much lower than this.

As long as 1103 holds from here, wave (iv) has ended. Breaking back above 1115 would mostly likely signal the start of wave (v). Targets for wave (v) should be more clearer once we know it has started.

If 1103 does break tomorrow, 1100 and 1088 are the key pivots.

On the hourly charts, Apple has a pattern that is almost a perfect situation for Intermediate wave (4).

There is a complex head and shoulders pattern that could take us to the lower 200's. Look at my charts of the day panel at the top for the daily chart and a more detailed look.

Market Update - 7/27/2010

The 1121 pivot was tested and it held up pretty well. We seemed to reverse pretty quickly after the SPX hit 1120.95.

With the reversal off of the 1121 pivot, and the choppy sideways action for the rest of the day, I think it is pretty safe to say that minuette wave (iii) has ended. Yesterday, I left the option open that we could get to 1121 before starting wave (iv).

Wave (iv) should chop around for a few days. I am expecting a back test of 1100. However, 1090 must hold on any pull back. Any break back above 1121 could be bullish, so watch for 1132 if that happens.

I know there were some issues yesterday with the comments not working, but I think they should work now. Also, on the "charts of the day" feature, just hover your mouse over the chart and it should tell you what chart you are about to click on. If there are other issues with the new layout, please let me know! :)

Market Update - 7/26/2010

First off, you can see I have made some major changes to the website. At the top, I have a chart of the day feature with charts and EW counts of various stocks and indices. I will update these daily, the charts will stay the same. I can add/remove charts on request. So please let me know if you want me to track a stock and give daily counts on it. Just check the slider everyday for updated counts.

We continue to push our way higher in the final wave of Minor wave 2. The current count has us in minuette wave (iii) of minute wave [c] of Minor wave 2.

Right around 1115 is where wave (iii) = 1.618 x wave (i). This is a good spot for wave (iii) to end. We could get to 1121 before the start of wave (iv), but the up move is starting to look a little sluggish now.

If this is the end of wave (iii), wave (iv) should chop around sideways for a few days before our final push up in wave (v). The target for wave (iv) is right around 1100.

The key pivots for tomorrow are 1100 to the downside and 1121 to the upside.

We also closed right with the 200 day moving average today. We slightly broke over it, but I wouldn't count this as a break out.

This would be the perfect place to take a breather and chop around sideways before perhaps testing the 100 day MA around 1130. And as we know, 1131 is our key pivot high from June 21.

Market Update - 7/22/2010

We have broken over the key decending trendline now, and it seems like we are ready to break out. The strong push up today has done some technical damage for the bears.

The bearish count is now completely out of play, and the primary count is now that this is Minor wave 2.

We should continue to have an uptrend to atleast 1113-1115 for this wave. 1140-1150 on the upper range.

1113 is a pretty key area of support.

We have the upper bollinger band and the 200daySMA both lined up there.

The reason I am still labeling this up move as corrective is because of the internals. With a strong 25 point move in the SPX today, the interals were just under 10:1. That is pretty weak for this big of an up move. To me, this is a classic short squeeze.

1100 and 1085 are the key pivots for tomorrow.

Market Update - 7/20/2010

The new primary count is playing out nicely. I was expecting a test of the channel around 1086, we closed at 1083.

If this is indeed Minute wave [c] of 2, we should continue our run up from here. 1100 is the next major target to the upside.

Breaking over the downward sloping channel should create some momentum to the upside.

The alternate count is still alive, but it is almost out of room to the upside.

Any higher from here and this count will be out.

1060 and 1100 are the major pivots for tomorrow.

Market Update - 7/19/2010

This being Minor wave 3 seems like a stretch now. Today's bounce was a bit too much for this still to be a [iii] of 3 in my opinion. Perhaps IBM could push us lower, as it is currently trading lower after it's earnings.

But I think I want to stick with my alternate count for now. As I said yesterday in my weekend update, a up move would most likely mean that this is wave [c] of 2. So I will stick with that for now.

This wave [c] should continue to struggle its way higher and perhaps test the downward sloping line somewhere between 1086-1090 for tomorrow.

The alternate count is now that we are still in wave [iii] of 3. There is very little evidence of this currently, but any sudden down move that breaks Friday's low of 1061 could very well take us to 1044-1050.

1061 and 1086 are the key pivots for tomorrow.

Weekend Update - 7/18/2010

There seems to be 2 possible counts currently in play. I am still a fan of the primary count, since Friday ended up reversing down from the 1100 pivot. As long as we keep dropping from here, the primary count is still in play.

Currently, the primary count has us starting Minute wave [iii] of Minor wave 3 of Intermediate wave (1). This should be a very bearish wave. Much more powerful than the previous down moves. We should have very little bounces along the way.

The next major stop for this count should be 1040 or below. However, the only concerning thing for me is that wave [ii] retraced over 61.8% of wave [i]. But wave 2's are typically deep, especially at the start of a new downtrend. We also witnessed some deep wave 2's at the start of the downtrend in late 2007 and early 2008. So it's nothing unusual.

As I said before, the primary count has us in Minor wave 3. The alternate count, however, is a little different.

The alternate count is that we completed Minor wave 1 early this month at 1010. Currently, we have the end of Minor wave 1 at our June 6 low at 1040, which was a truncated wave [v]. Also, since we had a leading diagonal for wave 1, it is very rare to see a truncated wave in a diagonal, but we had to fit that in there.

But with this alternate count, there is no truncation at the end of Minor wave 1. It has a more "perfect" look. But this means that we are tracing out Minor wave 2 right now, which means we have some more upside to come.

It seems that we have completed wave [a] and may have completed wave [b] with the low on Friday, or atleast are very close to completing wave [b].

Wave [c] of 2 could easily take us to 1140-1150 with this count.

So yes, the counts are that we either go up or down... but this means that we are a very crucial point in the market. Monday should determine the direction. Basically, if Monday is not a decent down day, we may have to drop the current primary count. So if Monday is up, then the alternate count is in play. If we break down on Monday, the primary count lives on.

Market Update - 7/16/2010

The primary count stays alive with today's down move. We have remained below the key pivot of 1100, and have now reversed nicely away from it. We have also broken below 1085.

The next major pivot to the downside is 1065. We did slightly break below it today, but it wasn't a very significant break. If we can get below 1065 on Monday, 1050 seems like a good target.

Any bounces to the upside have to remain below 1080, however.

The daily charts are now starting to support the 1-2-[i]-[ii] pattern. If we are in wave [iii] of 3, we need to basically continue to have swift down moves with very little bounces along the way.

The only concerning thing for the bears is that the internals were not really supportive of a wave [iii] today. Breadth was as low as 31:1 negative early today, but closed at 23:1. If we can get some bearish internals on Monday, it would help the bearish case.

I will try to post a weekend update with possible alternate counts that could also be in play, so try to check back for that.

Market Update - 7/14/2010

We remained under the key pivot of 1100 today. As long as we remain below this level, we can stretch the current count in my opinion.

Today was a pretty choppy day, sort of expected on the Wednesday before expiration. But regardless, 1100-1103 must not be breached.

If it is, we could have a different count in play.

The pattern we have had these past 2-3 days looks very similar to our topping process in late April. It's just a smaller version.

1085 remains the key pivot to the downside.

We are also at resistance on the daily charts.

Market Update - 7/13/2010

It's been a few days since I have posted. The previous key pivot was at 1085, and we have ovbiously broken that. However, we have held resistance at 1100.

If we break above the 1100-1103 area, there is a good chance that this is not Minute wave [ii], but rather Minor wave 2. The current count has it that Minor wave 2 already ended, however the current up move pattern is not supporting that.

Breaking higher out of this area could change the wave counts. Either this is the end of minute wave [ii], or it's not minute wave [ii].

And as we know, 1100 is a key pivot, even on the daily charts. We have always had trouble when we approach this area.

Breaking to the upside could potentially be bullish.

Key pivots for tomorrow are 1103 to the upside, and 1085 to the downside. But it looks like the futures are opening much higher because of the Intel earnings. It could be a repeat of what happened last year around this time.

Market Update - 7/8/2010

It is ovbious now that Minute wave [i] of Minor wave 3 has ended. The bounce back over the past few days has proved that. This means we are now in wave [ii] of 3.

As we know, wave 2's are typically sharp and quick. The 61.8% retracement of wave [i] is around 1085, and since wave 2's are usually deep, this seems like a good target. About 15 points higher from where we are now.

However, we have already retraced 50%. This could be a good spot for wave [ii] to complete, but the market doesn't seem ready to crash in a wave [iii] of 3. Remember, wave [iii] of 3 will be very powerful to the downside, more powerful than anything we have seen in the past few months.

Again, at this point, I don't think the market looks ready to completely breakdown. Wave [ii] doesn't look exactly complete, so we can easily get to 1085. But remember, the market loves to fool us... so don't be surprised if we do break down.

Breaking back below 1044 may signal the end of wave [ii].

Market Update - 7/6/2010

In my last update on Thursday, I said that there was a good chance that wave (iii) was over and we could get to the 38.2% retracement which was around 1044. The high we made today was at 1042.

There is a very good chance that we have ended wave (iv) today. If this is the case, we should continue downwards and make one more new low. Anywhere below 1010 is a good target.

However, I think we may break 1000 and get to somewhere around 990.

We also have a clear 5 waves down from our high this morning. This could imply a new impulse for wave (v).

Perhaps a quick bounce tomorrow morning, then a nice sell off.

Key pivots are 1029 to the upside, and 1010 to the downside.

Market Update - 7/1/2010

My secondary count from yesterday is most likely now in play. With the sell off this morning, then the bounce back, it is a good chance that wave (iii) is over, and wave (iv) has started.

The target I had yesterday on my alternate count was 1014 on the SPX. We made it to 1010. Close enough.

The 38.2% retracement of wave (iii) would be somewhere around 1044, and as we know, this pivot is very very important. But me may not make it that high, we also have some key resistance around 1029.

Ovbiously, if we break down below 1010, we could easily get to 993.

Head and shoulders. When was the last time it worked? But we do have a very scary head and shoulders pattern completely formed on the SPX daily charts now. The neckline has also been broken.

The target is back to the July '09 lows around 870. That may seem crazy right now, but if 2 months ago someone said that the SPX would be 200 points lower than it is now, would you believe it? So why can't we drop another 200 from where we are today?

Either way, the reason this may fail is because everyone is talking about this pattern. If everyone knew this H&S was going to work, everyone would make money. The market never lets that happen.

The one other concerning thing is that the VIX has some heavy negative divergence. The market has broken the 1044 pivot by nearly 44 points, yet the VIX has not even approached the 48 level, the same level it hit when we first approached 1044 in mid May.

There is less fear in the market @ 1010 than there was @ 1044. Is it bullish divergence? Or is it too much complacency?