Monday, October 20, 2014

SPX Update: Detailing the 1-Minute Chart

After spending a ridiculous amount of time on one chart for this update, there's actually surprisingly little to add to Friday's update.  So far, the rally stalled at the noted key level of 1898, and has enough waves in place to be a complete ABC.

I'm going to start with the chart that I spent the most time on, which is a one-minute chart with some "thinking out loud" annotations.  If you don't like complex charts, then (to make it as simple as possible) C/3 could very well be complete at 1898.

Next is an updated version of the 10-minute SPX chart I published on Friday.  Note the rally stalled twice at the red trend line (I deleted the annotation that mentioned that line as important, but suffice to say it's somewhat informative that bulls failed to break out over it).

Finally, the simple bigger-picture chart.  This is still my preferred path heading forward; until the picture changes, I am leaning toward new lows, ideally in the form of a complex fourth wave (gray (4)).  In the event the market does make new lows, if it subsequently fails to hold support in the 1800-1814 zone, then we'd anticipate that gray (4) was already complete as opposed to complex as shown.

In conclusion, amidst all the anticipation of new lows, I would again like to remind bears to pay attention to the basics in the form of trend lines and key downside levels.  If the market wanted to form an intermediate ABC decline, there are enough waves in place for said decline.  So, although it appears that the decline is not yet over on an intermediate basis, the first impulsive decline in a bull market is never a given -- and we must always honor both sides of the trade.  Trade safe. 

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