Market Update - 8/30/2010

The turn around in the futures was pretty big. Nearly 30 points. Last night, we were at 1072 - up over 8 points I believe. The bears did manage to push it down. Now they just need to keep it down and we need to break our current lows at 1039. Volume wasn't too heavy, and the internals ended at 12:1 down.

The current wave count is that we are in wave (v) of [i]. But we basically need to keep dropping from here with very little bounces. Any break over 1065 will be the end of this count. 1039 is the next important pivot. If we break below we could get to the 1025 area.

I am going to mark today's low as the end of wave i of (v). We could get a quick bounce for wave ii. If the bounce is large, the count could be wrong. Wave (v) could also be one large thrust down. So we will have to wait and see what happens.

1065 and 1039 are the key pivots for tomorrow.

Market Update - 8/27/2010

The 1039 pivot held and produced a pretty large bounce back up to the upside. However, we did slightly break our previous low on the SPX, so wave v of (iii) did not truncate. I am however concerned about this bounce back that we got. It was pretty powerful and it sure did not feel like a wave (iv).

We are also approaching the limit wave (iv). 1069 was the low of wave (i), and wave (iv) must not cross into wave (i) territory. We have also broken the 38.2% retracement and the 50% is at 1069.

This certainly looks like an issue for the bears. If they cannot push it down on Monday there may be a slight change to the count. I wasn't happy with this count from the start of wave (iii). I had said before that it didn't feel very bearish.

I will try to have more over the weekend and try to look more into possible wave counts that could play out on Monday.

Market Update - 8/26/2010

I think wave iv of (iii) may have come to an end at today's high, and the down move is the start of wave v. Wave v should at least break 1040, and perhaps even get down to the 1020 area or lower. Once more waves within wave v start to form, a target will be more clear.

Regardless of what wave v does, wave (iii) as a whole will most likely be pretty short. This means that wave (iv) won't have too much to retrace.

Key pivots for tomorrow is 1039 to the downside and 1061 to the upside.

The hourly charts on the SPX also look pretty bearish. There is a nice downward sloping price channel.

The MACD is also about to cross down, and the RSI is below 50. But there is a good chance that both of these diverge at the next minor low.

Market Update - 8/25/2010

For this being Minor wave 3, the waves to the down side may look impulsive, but they certainly don't feel impulsive. We seem to be getting a reversal on every down move. Despite getting that wave [5] low below 1044 I was looking for, I am still not satisfied by this wave iii. It didn't really feel like a wave iii.

The count suggests that we are near the completion of wave iv, if it has not already completed. 1064 is the line in the sand. If we break above, this count is wrong.

Now, wave v should really take us much lower. Below 1010 would be the ideal target. Wave v could be strong due to the weakness in wave iii. But we will have to see how it unfolds from the start.

1064 and 1039 are the key pivots for tomorrow.

The 100d MA has also crossed below the 200, and the 20 is soon to cross below the 50.

Market Update - 8/24/2010

A lot has happened over this past week that I have been away. We got the wave (ii) bounce to 1100, which was expected. After that, we got a very quick reversal down, which was also expected. I had called for both of these to happen while I was away.

One thing that is concerning to me is the market internals from today. This morning, the drop we had was very bearish and it looked like it would continue. Market breadth was over 47:1 in the morning. Only problem is that the bears couldn't keep it down. The market did come up in the early afternoon, but breadth nearly came back to the 0 line. We were between 3:1 and 5:1 for most of the day after that.

For now, I see 4 waves down from yesterday's high. If this count is correct, we should get another quick down move tomorrow that should break 1044 on the SPX. It may extend further. This will then complete wave iii and wave iv will then start.

My concern with this count is that [3] of iii wasn't really that strong, and didn't last too long. And if wave [5] of iii is not extended, wave iii as a whole will not be that lengthy, considering that this is Minor wave 3.

I am also updating my charts of the day, which need some catching up to do. So please take a look at those. They should be updated within a few minutes of this post.

Market Update - 8/16/2010

Just to let you all know, I will be gone for the next week or so. I will not be posting for the rest of this week, and perhaps a little into next week. Check back some time next Tuesday/Wednesday. I should be back by then. Also, tomorrow it will be 1 year for this blog... and I want to thank all of you who visit here frequently. It has been a pleasure doing this. Let's hope for another good year! :)

Last Friday, with the down move late in the day, I had expected that perhaps wave v of (i) was underway. Looks like the gap down this morning may have completed that wave v.

As long as 1069 holds within the next few days, wave (i) has ended and we are in a wave (ii) bounce. Expect a back test of 1100 perhaps.

The key pivots for tomorrow are 1069 and 1082. If 1082 gets taken out, there is a good chance that this is wave (ii). If 1069 is broken, wave (i) may have one more bottom coming. But I think this is most likely a wave (ii).

By the time I get back, we could be completed with wave (ii) and at the beginning stages of wave (iii) of [i]. So watch for any test of the upper 1090's to lower 1100 and then possibly a quick reversal.

See you next week!

Weekend Update

First of all, the Disqus comment system I originally had was not working, but apparently it just started working but it removed all my old comments.

So in response to the question posted earlier...
          "Rish, I am reletively new EW follower and when I counted for $RUT I get us still in wave 3. To be exact I think we are in 5 of 3 of 1 and that is counting from 7/27 top. Please let me know why you think I am wrong if you get the chance.
Thx
r"

Actually, if you count 7/27 as the top for Minor wave 2, this count is correct... However the count would be [5] of iii of (iii). Here is a rough chart I put together of your count.

But since the SPX, DJI and Nasdaq all made new highs on 8/9, I like to count that as a truncated top for the $RUT. I don't believe that way is wrong, since in the end all of the indices are eventually going to follow one path. So either count is correct.

This is my count from the 8/9 top on the RUT.

So we could get a lower open on Monday, it is not needed, but it would make a nice 3rd touch on the lower trendline.

I will try to have more later on as well.

Market Update - 8/13/2010

The choppy and side ways action over the past few days was what was expected of subminuette wave iv.

With the down move late in the day today, I think there is a good chance that wave iv has ended and we have started wave v.

Wave v should take out the current lows made yesterday. The target is somewhere around 1060 for now.

Of course, wave iv may not be done yet, but I don't think there is a lot of upside left. If we do get a massive up push, the alternate count is that wave (i) has already ended.

The Russell shows a more clear version of the alternate count.

Market Update - 8/11/2010

I think it is now safe to say that the market has indeed topped. Yesterday, I mentioned that if we were to get a down move that broke 1107, and the market was to stay down, there was a good chance that the top could be in. Today was also a pretty strong day in terms of market breadth. Breadth closed 36:1. That is pretty bearish.

As to where we are in the wave count, well we are in wave (i) of [i] of 3. Where exactly in wave (i) is yet to be determined, but my guess is wave iv should start soon.

I think we may chop around sideways. We may get a slightly lower low in between, but I think after a little consolodation, the market should start to drop substaintially again.

However, if the market continues to show a high level of bearishness, we may not have a lot of bounces. So yes, the trend is down. But we may retest 1100 one more time.

The Russell has also broken out of the decending triangle. It was down 4% today.

Watch for the R2K and Dow Transports to lead the way down.

Market Update - 8/10/2010

Today seemed like a mirror image of last Friday. We were down a good amount in the morning and then we reversed back up at the end of the day. The reason for the up move today was ovbiously the Fed announcement. However, the one difference between the 2 down moves is the internals. At the low today, breadth was about 22:1. But this quickly reversed as the market started to come back up.

So for now, we cannot seem to get a sustained down move that holds. This is bullish price action. Breaking back above 1125 could send us to new highs.

1111 and 1107 are the key downside pivots going into tomorrow. If we do get a big down move that holds and the market breadth does stay strong, there is a good chance that we have topped.

But until we do get that down move, the trend is still clearly up. It may be fading, but it doesn't want to give up just yet.

The key index to watch is the Russell 2000. It seems to be diverging away from the other indices. It hasn't made new highs since the last week of July, and it seems to be making lower highs.

If we can get a lower low, the Russell may set the trend for the other indices.

Market Update - 8/9/2010

I seem to have fixed the comments issue. They should be working now.

We got within 2 points of the 1131 pivot today. I still don't think we have topped, at least not until we break 1105. We may break over 1131 soon, however.

The wave structure has also not changed much. We are still looking for a high some where around 1135.

The wedge is getting tighter, so the top could be very close. It's just a matter of time now.

Internals are still pretty weak to the upside, as well as to the down side. For any sustained down move to come, we would need to have internals that prove the down move is here to stay. Until then, the trend is up.

Market Update - 8/6/2010

Today seemed to open up in a pretty bearish way, however the internals were never supporting the down move. Despite being down nearly 20 SPX points, the internals were not even at 10:1. So with the lack of down side volume, the market turned up pretty sharply at the end.

Also, the wedge was just barely broken today, but it is still in tact, and as long as that support line is not taken out, the trend is up.

1135 is still a valid target, and the count has not really changed much. I am marking the low from today as wave b.

1131 should be tested soon if this bullishness continues after the weekend.

It will be key to see how the futures react on Sunday night. I will try to have more over the weekend.

Market Update - 8/5/2010

The choppy wave action and the side ways movement seems more like a topping process that consolodation to me. However, I still do think that we will get one more high above 1128. The number I am looking for is 1135. But overall, I don't think the SPX can go much higher. 1140 is the max according to what I see.

Despite the price action over the past few days, I don't see a distinct top yet. I would like to see a big open and/or up day reverse down. I think that will be the sign of a top.

The first test is crossing over 1131. This is a very key pivot, and also happens to be our current major high from mid-late June.

Of course, if we happen to have a big bearish day with heavily bearish internals come within the next few trading days, I think it will be safe to call a top. So just be cautious for a sudden swift down move. With the market being so close to a top, it could happen at anytime.

Also, this topping process looks similar to ones we have seen in the past.

As we know, tops are a longer process that bottoms.

Market Update - 8/4/2010

For those of you following my "Charts of the day" feature, take a look at the RIMM and USD charts. There is a good chance that those 2 are ready to change trends......

...We came within a few points of they key pivot at 1131. It is hard to say whether or not we have topped yet, but the waves are starting to get more and more choppy and it looks like a real mess on the smaller time frames. Perhaps the top may be closer than we think.

The counts remain the same for the most part. I am still looking for one final push higher to somewhere between 1131-1135.

1140 is the 61.8% Fib. retracement. So anywhere in that range is a good topping area.

We also have a very clear wedge that lines up with some nice Fib time and price ratios.

Late Friday afternoon looks like a good place to top, perhaps right around 1140 on the SPX.

As far as Dow is concerned, 10700 is a pretty solid pivot.

Breaking higher could send us to at least 10900 and maybe even 11000. So we have to watch that area.

Market Update - 8/3/2010

There seems to be an issue with the comments on Blogger. I have read that a lot of blogs are having this comment issue and Blogger is looking into it. So if you have tried to post a comment in the past few days I apologize for it not showing up. I will let you know when it is back up and running.

Today seemed like a consolodation for more upside to come later in the week. The down move was not impulsive, internals and the wave structure both support that.

We could get another test of 1115 before heading back up. If 1115 does break, then 1105-1100 must hold other wise it's not good news for the bears.

Both counts again are basically the same for now, but the 2nd count is starting to make a little bit more sense now. Either way, the outcome will be the same.

1115 and 1105 are the key pivots to the down side going into tomorrow. For the upside, watch 1131-1135.

Market Update - 8/2/2010

1115 was taken out today, so it is clear that this is wave (v) of [c] of 2. We fell short of 1131, but I do think we will get to 1131-1135 before wave 2 is over.

There are two ways to count this Minor wave 2 currently. Both are pretty much the same and have virtually the same targets. There are only minimal differences. The first is the count I have been tracking for a while now. It seems that wave [c] is an expanding diagonal.

It doesn't look that great on the charts, but that doesn't mean it's not possible. The target is still around 1135.

The second count is that Minor wave 2 is an expanded flat. Basically, the low on July 8th was a truncated wave [v] of 1, and since then, despite breaking that low of 1040, we have been in wave 2. Also, this move up looks more like a series of a-b-c's than a 1-2-3-4-5.

So this count is more bearish in the long run. Since we seem to be in a wedge, and a contracting diagonal wave [c], prices could fall pretty hard and fast once wave [i] of 3 starts. Harder and faster than the other count.

So 1131 is the key pivot to the upside tomorrow. If we have a big bearish day tomorrow, it could weaken the bullish count and point towards the start of minor wave 3.