Saturday, 8/30/14 update

Intermediate W4 was done at the 1890.25 low of Aug 7.  Since then Minor Waves 1, 2 & 3 of Inter W5 look complete with the distinct possibility that Inter W4 is also done at the 1987.50 low of Aug 28.  If so Inter W5 is in progress and will terminate at the important long term top of Major W5 of Primary W III.  A possible target is at 2013.00 where Minor W5 = .50 x Minor W1.  This target lines up well with an Intermediate W5 target of 2012.50 where Inter W5 = .786 x Inter W1.

An alternate possibility is that Inter W5 will be an extended wave, in which case the ES/SPX would still be in Minor W1 of Inter W5 with the nearby projected top being the conclusion of Minor W1.  This alternate would portend a lot more distance yet to travel in terms of both price and time for Inter W5.

Thursday, 8/22/14 update

Steady ramp up in the ES/SPX since the Aug 8 lows.  The bearish alternate count presented the last couple of weeks is obviously now eliminated.

If this count is correct then the ES is in the 5th of a 5th wave of the bull market dating back to the October '11 lows.  In other words the end game.  Possible targets are at 2012.50 where Inter W5 = .786 x Inter W1 and after that at 2045.75 where Inter W5 = Inter W1.

Saturday, 8/16/15 update

Friday's high at ES 1961 marked a 70 point bounce off the low of Friday Aug 8.  Nice jump so far, but it needs to be pointed out that 40 points of that move all occurred on the 1st day.  The bullish preferred EW count shows a series of nested waves 1 & 2 off the Aug 8 low, if so there should be some upside acceleration immediately ahead.  If not this market could be in trouble as shown in the alternate count, which has the ES tracing out an ending diagonal "c" wave of an irregular flat 2nd wave of a developing bear market.  

Preferred count

Alternate count

Sunday, 8/10/14 update

The evidence that the selling in the ES/SPX that commenced in late July is done (for the time being) is pretty strong.  Wave counts from the July 24th highs into Friday's lows can be counted as complete.  In addition, market statistics as measured by Al's Indicator are in buy territory:

 Preferred Count

Alternate Count  

The big question at this juncture is weather the bounce off of Friday's lows is just that - a bounce - or are we going to see a run to new highs.  One key level is that which was pointed out in last weeks update - the assumed Intermediate W1 high of 1887.50 of early March.  If the selling resumes without new highs occurring and prices poke below that 1887.50 level then the odds of a major top being in place increase significantly.  On the other hand, if the current bounce moves up past the 80% retrace level of the recent sell off then new ATH's are highly likely.  That level is at ES 1969.25.  Meanwhile the form of the bounce will be a good tell.  If it is strongly impulsive then new ATH's are likely, if it is choppy and overlapping then continued selling is likely in the cards.  So far it's been pretty impulsive looking.

Saturday, 8/2/14 update

The current preferred count has the ES in Inter W4 of Major W5 up off the Feb 5 low at 1732.00.  Inter W2 was a flat, so by rule of alternation Inter W4 should be either a zig-zag or triangle.  So far the ES shows 3 waves down from the Inter W3 top at 1985.75 on Jul 24, so if the low for Inter W4 is in place or near at hand the EW requirements for the move have been met.

 
The internal count for the move off the Jul 24 top has Minor wave "a" bottoming at the 1960.75 low of Jul 28, wave "b" top at the 1979.50 high of Jul 29 with Minute waves 1 thru 3 of Minor wave "c" complete into Friday's 1910.25 low print.  If correct the move only needs Minute waves 4 & 5 to complete Minor wave "c" and thus Inter W4.
First possible target for the correction is at 1904.50 where Minor wave "c" will be 3 x Minor wave "a".  There is also a "volume hole" at 1904.25 (see chart below).  Next possible target is at  1894.50 which represents a .50 retrace of Inter W3.

Longer term perspective shows the ES moving towards the conclusion of the current bull market which commenced at the Oct 2011 low at 1068.00 - close to 3 years in duration and a doubling in price, quite an impressive run.

Concerning the current sell-off, a price level of significance is at 1887.50.  This is the peak of Inter W1 in the preferred count.  If the ES continues dropping and pierces down through that level there will be a 4th wave overlap of wave 1, which is an EW no-no.  In that eventuality the possibility that Primary W III has already topped at the recent highs becomes the preferred count as per the below alternate.  If the Primary W III top is in place then the market is at the very early stages of a deeper and more severe bear market than has been seen since 2011 when the ES dropped over 25% in the space of a few months.

 

Finally I'd like to share some work with not a lot of description (it's late PM Saturday) but which may be of interest.  I have a proprietary market indicator that was 1st developed in the mid 1980's which is dubbed "Al's Indicator".  The data base for the indicator was originally in a Lotus spreadsheet and was then migrated to Excel.  In the last couple of years my trading/charting platform (TOS) has made the base data used in the indicator's formula available.  A TOS routine was written to use that data to generate Al's Indicator in their platform.  The original indicator had 3 variables in the formula, and it was cumbersome to manipulate those variables using an Excel spreadsheet.  However, expressing the indicator in the TOS trading platform allowed for easy variation and testing of the inputs, so I've been playing with that.  The below chart shows "Al's Indicator" against the NYA with three different variable sets.  As I said I'm not going to spend a lot of time discussing the chart, but I'd like to point out that the 1st variation (which is the original in terms of variables) has the market in buy territory as defined by this indicator.