Thursday, October 2, 2014

Charts 10-02: We're in a non-extended wave 3

Needed to get a revised chart in.  Tonight I'll update the dual-nested Three Peaks and a Domed House patterns.  Yes, two 3PDH.  One inside the other.

I was excited Monday over the 20 handle gap down on /ES and then support, but what I think we actually had here was an end to an oddly-shaped minor wave 1 (see chart).

The larger count has us in wave 3, but this is a subtle one -- it's not extending.  At SPX 1930 (today) it should be slightly longer than wave 1, but not at a multiple of 1.618x of it.

So we either have a stealth wave 1 (bear case), or this is yet-another ABC off the top that is just a correction.  If we close with a stronger-than-expected push into Friday (SPX 1957?) that will leave us sitting right on another inflection point.  Which way to go?

The bear case would take us still lower next week to meet the 200 DMA at 1904 support and the Full Moon.  The following week we would have one more kissback off the old rally channel at SPX 1966, and a dive to the low-1800s into EOM October.

SPX 10-02 a.m.

7 comments:

Trading Sunset said...

Well... CG... getting interesting isn't it?

--
1900.. then a 'dumb bounce' for 2-3 weeks... and then I'm calling it.

For the big money...short stops 1990/2000.

christiangustafson said...

200 DMA fits in well next week as support.

Maybe -- dumb bounce for only a week. Up to now vol and vol ETFs have been subdued. Watch out, though, if we should reject off an old channel!

Bryan Franco said...

The next ATH should be it. I would so much rather them get it over with now, otherwise we have downside capped to 20%, and that would actually make it more likely that we are in a large Wave 4 down (in a new Bull market) as opposed to having completed the ultimate top (C of B in a guns-and-butter market).

christiangustafson said...

So here we are at another crux. Next week's turn dates could provide a (the?) top.

Couple of things in Bryan's favor:

1. UVXY was so subdued on this run

2. "wave 3" did not get scary and extend

christiangustafson said...

BTW, there is a sick, sick wave count that can put another (one ... more ...) all-time high ahead.

I'll post it tonight. It is evil.

Bryan Franco said...

Would love to see 'em CG !

christiangustafson said...

A chart for Mr. Bicycle.