Monday, October 15, 2012

SPX and INDU: Market Approaching a Turn?

Friday's update expected further upside to follow after Thursday's expected test of 1425-1430, but the market instead made a slight new low in Friday's session.  I suspect the upside was simply delayed a day as the correction became more complex.  After studying a number of charts, I believe the odds are good that the market will rally over the short-term, and then reverse back down to make another marginal new low.  From there, I currently expect it to reverse back up and make new swing highs.

It is possible that a more meaningful bottom is in place already, but the micro wave counts suggest this is slightly less likely (see charts); it is presently expected that the next low will be significant.

(If you're new to Elliott Wave, it might help to familiarize yourself with the basics, as found in this article.)

Below shows the preferred short-term S&P 500 (SPX) path in blue.  If for some reason bulls fail to reclaim 1438.43, then all bets are off, and the short-term outcome would be more immediately bearish.  My preferred outlook is that bulls will retake the 1438 level, and 1444-1448 is my current short-term target.  Sustained trade above 1453 would suggest the alternate count of a failed fifth at 1426 -- which would mean the bottom is in, and there would be new swing highs directly (see 2nd chart).

Stepping back a bit, the larger preferred SPX view is shown below. 

On the Dow Jones Industrials (INDU), I've outlined the preferred path in more exacting detail (below).  If my micro interpretation of the structure is correct, SPX should follow a similar path.

The 3-minute INDU chart details why I've chosen that count for the short-term.  Again, the short-term alternate count considers the possibility that the bottom is in (continued, next page)...

Finally, it's been a while since I've updated the alternate big picture bearish count.  This count has refused to die, but bears still need to claim some key support levels, such as 1426, 1415, and 1395-1400, before I'll consider it more seriously.  The preferred bullish intermediate potentials are, of course, fully predicated on key support levels holding. 

Due to the alternate potential of a wave (C) intermediate top, longs certainly shouldn't throw caution to the wind... but I just can't get away from the momentum at the 1474 peak  So, unless bears solidly break through and close beneath support, it still seems unwise to get overly bearish yet.

In conclusion, it is expected the week will start off strong, only to reverse to new swing lows in fairly short order (1415-1424 is a nice target) -- and then reverse back up again to new swing highs beyond 1480.  Obviously, since this is a pretty exact call that tries to anticipate three decent turns in advance, any distinct change in the wave structure -- or key pivot breaks along the way -- would alter this outlook.  The first alternate count would see the market simply head more or less directly to new swing highs.  We'll take a look at things again tomorrow and see how the preferred outlook is tracking.  Trade safe.


  1. i warned ya about katzo from the beginning. once he is not top dog on site he will try to get them banned then ends up getting himself banned lol/ part 2, 3, 4 etc

    I cannot PM you on PLs site, I am banned from there for being bad...

    Oct 15 2012, 9:56 AMCuriousmind: the market is probably going up when Katzo gets to his car

    Oct 15 2012, 9:56 AMForgiven1: WHAT!!!!

    Oct 15 2012, 9:56 AMForgiven1: I did not know they banned you.

    Oct 15 2012, 9:57 AMkatzo7: I was a bad boy trying to warn ppl against Blind Squirt's crap, the copy and paste trader

    Oct 15 2012, 9:57 AMkatzo7: do not listen to him

    Oct 15 2012, 9:57 AMRebel1310: that is why we are all here

    Oct 15 2012, 9:57 AMkatzo7: yes

    Oct 15 2012, 9:57 AMForgiven1: I just ignored him because I cant read as fast as he appears to read.

    Oct 15 2012, 9:58 AMRebel1310: I think PL has lost control of his site to just a few posters

    Oct 15 2012, 9:59 AMForgiven1: I got to go to work, see everyone later.

    Oct 15 2012, 10:00 AMRebel1310: I feel bad for him and what he has gone through

    Oct 15 2012, 10:00 AMForgiven1: I will get you an email address later Katzo

    Oct 15 2012, 10:11 AMCuriousmind: see what I said about K7 driving to work and the market going up...

    Oct 15 2012, 10:27 AMkatzo7: there goes franny's pop

    Oct 15 2012, 10:30 AMCuriousmind: hye K7 other than arr, what is the other income stock that starts with A you were talking about?

    Oct 15 2012, 10:31 AMfrannybrd: Still trying to figure out where we are in a pattern.

     Welcome to my new Chatroll!

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    19 39 ema 50 sma  getting ....

  3. whoa to america. oops

  4. I am amazed to read below, that katzo7 has left your site, permanently.
    what did you do to him, fool?  because without him, you are nothing.
    because without katzo7, your site would've been pure trash long ago, 
    since you go to sleep during et prime trading time, 
    plus no one else on your site is worth reading at all, during trading--
    just a bunch of chickens running around, with their heads cut off. 
    and you, you waver back and forth in your articles' stance, constantly--
    e.g.  like right now, with your new super-bullish interpretation of ew waves, 
    despite you previously being (wrong) a staunch mega-bear, over last 2 years.  
    to me, your personality is looking very much, like a top --contrary-- indicator. 
    so now, you are big bullish?  then, I'll be big bearish.  and viceversa.  goodbye.

    what a waste of time you are, hawaii dude.  hope they kick you out of minyanville, asap.
    anyway, now you don't even let onlookers read the mad ramblings, of your stooge 'donators'.