Here is the SPX diagonal I posted yesterday. Since then SPX has declined bingo to the lower trendline.
The DJI has declined to the trendline on the hourly chart posted earlier. In the SPX chart there are 3 abc waves upward with the last incomplete. This implies that another upwave will finish it off.
My original count is still valid, that we are in a 5-wave off the 7/2 low with wave 3 complete and into wave 4. This also fits with I1. With this count any decline below 10,400 invalidates it and implies sell.
.bmp)
The reason that I like the diagonal is that the trendline acquires far more weight in the sell decision and, when used with the 5-minute, 380-unit M/A increase the odds. It also implies an endpoint (the throwover) that can allow me to calculate the top more precisely.
Any further decline will invalidate the diagonal because it needs another leg up to new highs. Only a decline below 10,400 will invalidate the second chart count above.
There is a second shorting point below 10,470 that I'll use for the second half of a short position, that beyond the SP futures 90-minute M/A -14 points.
grrrrrr. the comment software has a bug that I know about, but forgot about it. If you preview your comment and then forget that you need to click on Edit to make a change and instead click on the preview text area, you lose the entire comment.
ReplyDeleteI had a long comment about the internal waves of the diag that I am not going to retype. Bottom line is that I think we could just as easily be dealing with a double zigzag as a diagonal here, but either one probably won't make that much difference in where the top ends up.
The double zigzag could take us higher though than the expected top area for the diagonal, maybe as high as 1170 or 1175 SPX.
Pima
ReplyDeleteAin't an editor's life grand!
Bottom line is that EWI's count is not the highest probability. I concur. The market is really respecting this trendline, but it could be doing that in a zig-zag as well. I'll move the zig-zag up as equal probability with diagonal. I1 timing does favor the zig-zag because under the diagonal we have a final pop, even with a throw-over, that limits the life of this rally.
yeah, if we start the C wave of the double zigzag today or early next week, then it might take a few days to complete, putting us right at your I1 turn date.
ReplyDeleteYou probably know that some EWer's are counting the move down from the April high into the June low as a LEADING diagonal. If that count is correct, then we would expect a deep retracement because leading diags are often followed by 78 percent retrace. 78 percent retrace of that move is in the neighborhood of 1175 SPX.