A sidebar: often an Elliott pattern is evident in the 24 hour ES chart that presents a clearer picture of the correct count than what is evident in the 6 1/2 hour SPX chart. In last night's overnight trading a 4th wave triangle is pretty obvious, followed by an obvious 5th wave into this mornings lows.
Determining where to place the trendline in the trendline/oscillator system can sometimes be difficult. The basic idea is to connect the highs (in a bear market) or lows (bull market) of the price bars making up the trend. However, sometimes a trendline drawn that way appears to be either too shallow or too steep. So there are other methods I've toyed with, one can be seen in the next chart. The gray line across the top third of the chart is a standard trendline. It appears a little shallow and doesn't really reflect the slope of the sell off. The blue line connecting last Thursday's high and this morning's low is a regression line, which was used as a base to draw a secondary trendline parallel to it that connects with Friday's high. When the oscillator moved above 20.0 today followed by the ES blowing through that secondary trendline I was prepared to go long on a pullback. We never got a pullback that I felt was significant enough so the trade wasn't executed, but you get the idea.
The 30 minute V Stoch rolled over towards the end of the day. I'm planiing a long entry based on that indicator moving down towards buy territory. Markets retrace 99.9% of the time, and in this situation I believe a retrace is worth waiting for. But the market may force my hand, I'll reassess overnight and tomorow AM.
