SPY two Paths?

Will it be the green or the red path? 

My first choice is the red considering that the emerging markets also look like they want to turn over.

S&P500 Top Top Top?

Pink lines... shows up at approx 1448-50. Top Top Top?
Do we pop it or do we touch it and drop. I am inclined to short it initially and then see how it goes from there.

SPY

Maybe time for a "Bull Steak"

S&P 500 Daily

This is a follow up to the previous post  S&P 500 Weekly, that i posted two weeks ago.
From the action in the last two weeks i think a clearer line in the sand can now be defined. A BLUE line that was part of the original post on the weekly chart has been changed to GREEN just for emphasis. It goes through the lows on 3/16, 6/16, the breakdown and retest 8/3, 11/8 before the market collapsed and again in 2012 resistance and then support for the 1st two weeks of Jan after which the market launched higher.

I think if the S&P 500 breaks this line in the next few days, we get a waterfall event like that of August 2011.
For the Elliotticians out there, it looks like a 5th wave is due which will most likely have extensions.

S&P 500 Parallels

A view on the S&P500 that i will consider as long as we stay under the high made on the 26th Jan at 1333.47
Blue parallel lines on shorter time frame beginning 2011 till August 2011 vs the white on the longer time frame ie. August 2009 to date.

Yes ! I am aware that the futures are up 9.

Posted at 5:45pm IST

S&P500 Musings

Below is a comparison of the spy in 2008 and now. The topping pattern came in the form of 3 peaks in 2008. The third peak shaped like a scissor blade followed by a decline, a slightly lower decline and then a 16 pt rally. The current top is similarly shaped with the latter half of the pattern seemingly more volatile. Totally surprising? Maybe not! Although the currently rally has come at an extraordinary pace (2.5 months vs 1 month), in form it looks just like the 2008 rally.

Fibonacci Observations.
The March rally in 2008 was barely a 61.8% retracement of the decline of that time. But if compared to the decline from the 2011 May highs (29.75pts) it is very close to 61.8% (18.39 as on 24th October) versus the 2008 retracement (16.15pts).
Of course, with the EFSF gimmicks the Oct 24th high is long gone, but we can now look to the 76.4% retracement level @130.16 which is not too far above, and should be tough resistance.

S&P500, Emerging Markets and a Famous Global Bond Fund

I started writing this blog to keep track of my own opinions and look back later at the madness that was. This post may serve just that purpose, as i attempt to reconcile the Elliott Wave count on the S&P500 ($SPY, $SPX) with that of an Emerging Market ETF ($EEM) and a famous Global Bond Fund that take pride in their fundamental bond selection process, currency allocations and other hedging strategies.
$SPY VS $EEM
From the 1st of Sep to the 4th of Oct the $EEM seems to have completed 5 waves down with seemingly perfect form and the $SPY over the same period has completed 5 waves but with a ton of rule breaking overlaps or 2 great counts for the $SPY are provided by Joe the ElliottTrader on Youtube.
Now introduce the bond fund with a very mild marked 5th wave or alternate counts in brackets, that shows that there is a possibility of a 5th wave that is yet to come.The only way i see a reconciliation between the three charts is for
1. The Bond fund to have a 5th wave down, as determined by the alternate count.
2. $EEM to have an extended 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today or on friday.
3. $SPY chop counted with a FLAT-W-X-FLAT, followed by a 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today as shown in the chart below. In this count all a=c with the exception of the a-b-c in the X-Y where c= a*76.4%

This would all go well with Robert Prechters "All the same Market " thesis, for an actual 5th wave lower, which i think could start today.

Any one of the below would invalidate the count.
1. $EEM gets above 38.24
2. $SPY gets above 119.56

SPY Elliott Wave Count

Over the last few months quite a few counts have been discarded. Somewhere in June i charted this as an alternate count and realised that this would have plenty of leeway to frustrate the most market participants.
As an overview, the whole pattern is a 5-3-5 zigzag marked with a white A-B-C.
Commonly counted is the first part.
It starts the white A wave with the march lows and counts 5 red waves ending at April 26th 2010.
The white B wave ends on July 1 2010.
The white C wave is where the confusion lies.It starts on July 1 2010 and breaks up into 5 red waves.
Red wave III further sub-divides into 3 yellow waves.
The most complex part is the yellow 4 wave which is a flat 3-3-5 (yellow A-B-C).
Yellow wave 5 subdivides into 5 waves that are apparent on shorter term charts and ends on 8th July 2011 . This yellow 5 wave is truncated as it barely breaches yellow wave 3 to the upside. This also completes red wave III.
The big picture says we are currently in a red wave IV with one red wave V to go which would complete white wave C and the entire move up.

The question now is: How low can red wave IV go?
We know that it cant go below 112.60 cause that would be the breach of red wave I.
If we draw fibs (green dotted) from the start of wave white wave C to its current high at yellow wave B we have 2 targets within range 50% @ 119 and 61.8@ 114.60.
Now looking for clues in structure on the 30minute chart.

The red wave IV started on the 6thof July and is tracing out a green a-b-c.
If green c were to end at 119, that would make a = c*261.8% and would also coincide with the above discussed 50% retracement.
Then there is symmetry. The white lines show that the first 2 moves down are almost symmetric. and the second 2 pink lines would also be symmetric if the move were to end at 119 creating a perfect green a-b-c zigzag for red wave IV. This again validates the 119 region for an end to this move down.

Another painful possibility for the bulls is that the market moves right down to the 61.8% retracement @ 114.60 making the 2 moves marked by blue lines almost symmetric.

There however seems to be more convergence at the 50% retracement @119 and in either case i would look for capitulation selling and divergence on the rsi to lighten up on the short positions.
With unemployment out at 8:30, a gap down may provide this opportunity

The Waves Take Hold of the S&P500 Part I

Finally i am smiling like an idiot. After almost a year of trying to count waves i believe i finally managed to pick a good entry for an S&P 500 short. The counts on a 5 minute time frame are followed by the counts on a one minute time frame.


S&P500 was shorted at 1347.50 with the use of SDS with a stop at 1351.00

The initial reaction was just as expected. If the count plays out we should soon fill the gap from 20th April (not seen on the charts) at 1312.70

Will update with new posts as this plays out...

Diamonds are so rare! Not....

Couple of days ago i watched as one of these rare diamond formations more seen on forex charts, formed on the SPX daily and broke to the upside. A similiar pattern now appears once again and if the structure of the last one is anything to go by, this one is the opposite. For this to go through on the down side i would like to see a test of approx 1001.42 followed by some selling which breaches the trend line from yesterdays bottom (994 ish today) and fills in the gap from the 3rd Aug at approx 888.43 .
However if this market gets to 1007, we all know what that means.....