On second thought.......

On Friday the strong sell off accompanied by the break in the lower channel trendline from Feb 5 was strong evidence that the rally from Feb 5 was done and a selling trend was starting.  However, one thing to be noted is an apparent 5 waves down on the SPX was accompanied by only a 3 wave pattern on the ES.  Also, two highly regarded analysts, Daneric and Tony Caldaro (links in the right hand sidebar) both are of the opinion that at least one final push up is necessary.  If that's the case, what we will most likely see is a broadening top formation as per the "alt" wave counts in the chart below.  Under this scenario we are actually in a 4th wave with one more A-B-C push up to go, probably topping in the SPX 1220-1230 area.  If anything, we're due for some sort of bounce here to alleviate the oversold conditions generated Friday.

Friday 4/16/10 wrap up

Vindicator buy/sell crossed into sell mode today on the strong downswing.   If you'll note, the sell line bottomed out yesterday AM close to the highs, which is a repeat of the pattern seen before and was an excellent spot to establish shorts.  The V Stoch bottomed out today right at LOD and has trended up since, but prices have only bounced a little - looks like the proverbial "dead cat bounce".  If this truly marks the onset of a significant correction we should see the buy line drop convincingly below the Trend Support line @ 1,000 on the buy/sell chart and should see the sell line maintain above that 1,000 level.  I will be watching the V Stoch near term to establish a short position.

From an Elliott perspective 5 waves up from the Feb 5 low can be counted.  That plus the strong swoop down today leading to a break of the lower channel line from that Feb 5 low makes a pretty convincing case that we are starting a significant correction.  Oneitem of note today was that on the hourly chart 5 waves down can be clearly counted from yesterdays high into today's low on the SPX, but only three are evident on the ES.  That situation may resolve itself in Globex trading Sunday night.  Volume today was almost double what it has been in recent weeks, of course part of that increase was OPX but not all of it IMHO.  Also another reason to think we've seen the top on the run from Feb 5 at the very least.

Vindicator 9:00 AM 4/16/10

Note the dashed black line on the buy/sell Vindicator marked "Trend Support".  It's placed @ the 1,000 level on the scale, note how the buy line has bounced off that level repeatedly in the last few weeks.  I saw this pattern in January during that sell off but it was the sell line at the time.  I think this has value from a couple of standpoints, 1st as a trade signal, 2nd as way of judging whether bulls or bears are retaining upper hand.

Thursday 4/15/10 wrap up

We continue to grind higher, buy/sell line solidly in buy territory.  If my EW count is correct, we have three wave 4 -5 sequences to go before a top, and we are currently in wave 4 of the first of those.

 

Wednesday 4/14/10 wrap up

Buy line soared on buy/sell Vindicator today, this move has some push behind it.  Party like its nineteen ninety nine.  Extreme frustration for me, as the little buy/sell dipsy-doodle at yesterday's close led me to close longs put on earlier in the day.  Need to spend some time reviewing trading rules, one thing that occurs to me here is that a more appropriate action in that situation would be to tighten stop so that profit is locked in rather than immediately close the position.  On Elliott count, note that IF the labeling is correct we have a ways to go.

Tuesday 4/13/10 wrap up

Vindicator buy signal (buy line above sell, V stoch ticked up from reading below 25) mid morning led to a long entry which was sold at the close today when the sell line crossed back below the buy.  Short lived trade, but it was a profit.  As I write this, the E-mini has gapped up on the night session open on Intel earnings.  That gap will probably get filled.  The Vindicator has moved to sell mode on the buy/sell and the V Stoch rolled over this PM, strong indications that the bias is to the downside over the very near term.
I took down the EW count on the rally from last Thursdays lows, that count is not correct as the downstroke this morning overlapped what had been marked as a W1 on Friday. There are a number of alternates here so further action is needed to zero in on the correct one.  The E minis continue to be even less clear. 
There is a second chart below that has a longer time frame, it's included so you can see two things on the buy/sell line:  continued oscillating pattern, and divergences in the peaks of the buy line.  Maybe the bulls are running out of ammo?

Monday 4/12/10 wrap up

Vindicator pattern right here is very similar to that of last Tue-Wed, with buy line trending down and sell line up towards a potential crossover, and V stoch working it's way downwards to buy territory.  Last week's pattern triggered an unsuccessful long entry according to the trading rules, that trade was mid-morning  Wednesday.  As it turns out, long was the right trade on Thursday morning.  But rules is rules, and one thing to be very careful about is changing the rules in response to what may be a one time occurrence.  

The Elliott pattern on the SPX is much clearer than that of the ES, so no ES chart at this point.  On the SPX, it looks like we're in the 3rd wave up off the low of 3/31.  Internal count of this 3rd wave is still developing, the 3 marking today's high is a tentative count, there's always the possibility that it's only a subwave 1 of 3.