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Sunday, June 7, 2009

SPX Hourly and 1 Minute Charts

The hazards of wave counting the 1 minute charts.

Thursday and Friday were some goofy moves. The SPX 1 minute shows a sharp move down off the 951 peak that did not look like any kind of 5 wave impulsive move down. It looks like a very sharp zig zag with C=A . That was followed by a bounce at 934 and what appears a slam-dunk 5 wave move up.

One possibility to account for all this is that a truncated last move to a peak with the tiny 5 wave move push up couldn't make it past 951. But even so, the waves after that do not appear impulsive down just yet.

However the hourly SPX chart sports some big time negative divergence. In fact I charted the entire rally and you can see its the biggest divergence created so far. Sometimes this negative divergence doesn't result in an immediate move down perhaps there is more upside first and the divergence will be more long-winded.

We will know Monday. This divergence on the hourly will result in a big move one way or the other. Either the SPX will have to continue to move up (and break above 950) or the negative divergence will result in a big bear move down with first stop at 914 breakout support.

I do have my alternate count showing a move down either back to 923 or to breakout support at 914 and that would perhaps fulfill the negative divergence price move. It is this negative divergence that is bearing on the market that has me wondering if I have my primary and alternate counts flip-flopped.

Too late now. We'll see how it plays out Monday. Good luck with trading. All in all since I am a permabear I'd rather be short at this moment (and I am building a position in QID if you want to know) then long. There is no guarantee of another 5 wave move higher as I am eventually calling for (maybe it comes after a correction to 914). Kenny and EWI says there is a more than a decent chance that 951 was the high for a while. So I certainly do not discount that 951 wasn't a near term high and that my entire count (X wave triangle and all) is somewhat wrong.

Either way the conflicting signals between these 2 charts will be resolved Monday.

But here is the VERY BOTTOM LINE I CAN SAY: I will stick with my overall count of another big 5 wave move above 950 AS LONG AS 914 SUPPORT HOLDS in any short term move down.

If 914 support breaks, then I would have to consider Kenny's count (or EWI's) as being the correct interpretation.


  1. Dan,

    Great analysis; very thorough and objective.

    Keep up the good work!

  2. Interesting action with closing bell;

  3. Ah, sorry - it was old link, not related for last friday. Skip it.

  4. Dan,

    Thank you so much for all the good work you put together especially over the weekend.

  5. Daneric,

    If 914 breaks do you, Kenny, and EWI think that P2 is over?

  6. For those of you interested in investor sentiment extremes check this out