Wednesday, 12/21/11 update

As usual there are a bunch of possible alternate Elliott counts for the ES at this juncture. One that bears watching has a triangle being formed since the early October lows. If true, the ES is in the final "e" wave of the structure. When concluded, prices will roll over into a bear market situation. This alternate has a much lower probability of others IMO, and can be ruled out if the ES significantly penetrates the upper trend line of the triangle in the 1260 area.

Monday, 12/19/11 update

The Elliott pattern since the Dec 8 top looks like a triple zig-zag into today's low and very possibly is done at that low. If so it was an almost exact .618 retrace of the rally from Nov 25 into Dec 8.

Three possible Elliott counts at the moment:

Alternate 1

Alternate 2

Alternate 3

Friday, 12/16/11 update

Pattern since yesterday's low looks corrective rather than impulsive, closed long ES for now.

Thursday, 12/15/11 update

Possible ES wave count. Went long ES, 1/2 position.

Wednesday, 12/14/11 update

Went long ES, 1/2 position, stop @ low today @ 1206.25, could get my butt shot off but worth a flyer (heavily oversold)

Tuesday, 12/13/11 update

What the ............... was that? Didn't expect the drop today. Possibly we're seeing a triple zig zag Minor Wave 2 from the Dec 8 top as per the chart below. The other possibility is that the pattern since last week's top is a series of waves 1 & 2 of a developing downtrend, which would portend some pretty serious bear activity in the very immediate future. Haven't worked up a chart for that.

A close above the downtrend line on the below chart would be a first indication of a bottom being in place and a resumption of the up trend that started on Nov 25.

Saturday, 12/10/11 update

It's nice to get something right once in a while, so forgive me if I boast. The chart below is the chart presented on the Thursday update, red dotted line is my projection. As you can see, the ES read the memo and followed instructions. Right.

On to reality. Two most likely possibilities for the coming week are first, a continuation of a Minor Wave 2 correction that started at last Thursday's high or second, Minor Wave 2 was complete at the early AM Friday low and it's up, up and away in Minor Wave 3.

Alternate 1 - Minor W2 continues

Alternate 2 - Minor W3 in progress

The coming week is December options and futures expiration week, those weeks have a bullish tendency. Also, the European deal struck Friday should lift some bearish sentiment off the market, at least temporarily (that is, until everyone realizes that it's a positive in the long run, but in the short run there is still a lot of European overspending and excessive debt). Finally, December tends bullish on a seasonal basis. So the edge has to go to Alternate 2.

One other note on charting the ES. The Minor Wave 1 labeling at the print high on Thursday looks odd on the charts, but it's because TOS rolled from the December to the March contract on Wednesday evening. This can be a problem with applying Elliott Wave to futures markets continuation charts.

The fix is to examine a non-continuation chart for the next monthly expiration in the series to gain clarification. As you can see, the proposed Elliott count doesn't look quite as odd if it is applied to a chart of the March expiration ES:

Thursday, 12/8/11 update

Just when you think you've got it nailed, surprise!!

Possible ES Ellliott count:

Wednesday, 12/7/11 update

Looks like a flat type correction, possibly done at the low a little bit ago. Nibbled at a long ES position with a tight stop (stop @ today's low), we'll see if it works.

Tuesday, 12/6/11 update

Sell signal on 10 minute SPX/Vindicator. Not going to trade this, looking to go long near the bottom of what could well be just a Minor Wave 2 correction. See ES Elliott count in 2nd chart.

Saturday, 12/3/11 update

The low on Friday Nov 25 was just a tad past the .618 retrace of the October rally.
The pattern off the low of Nov 25 has been clearly impulsive and quite powerful: 115 points up from 1147.50 (= 10% gain!) to the high of 1262.75 on Friday - just 5 days. Five waves can be counted into Friday's high, that high is being tentatively labeled as a Minor W1. Minor W2 is likely to be a shallow retrace given the power of the uptrend so far. A .236 retrace of Minor W1 is 1235.50 which is almost exactly the low of Minute W4 of Minor W1. The .382 level is at 1218.75, which is in an area that has been important resistance/support in recent months.

Updated daily charts of the two most likely alternates:

Alternate 1

Alternate 2