The last time we spoke on 2/7/11, I was looking for a decline on Tuesday to complete w.iv of w.(v) and for w.v to terminate between 1326.75 - 1329.25. The market traded near my targets to 132225 and leading up to today's market open, the Million Dollar question is whether the 132225 close completed w.5 red or if w.i circle completed and the market will continue to extend and subdivide as I have labeled the chart.
(As a reminder, I do not trade first waves after a top or bottom as they are dangerous... especially if you are wrong. I use first waves as confirmation that a trend change has occurred. As such I need to see a five wave decline to get bearish. )
A promising open had me looking for confirmation that a top was in place. As the day unfolded several waves began to overlap and when I compare the ES1-057, ES-057 and the $SPX at the 60 minute chart level , I am unable to confirm with certainty that a top is in place.
The clearest wave count I have is on the 30 min. chart of $SPX. Here I've identified the wave structure from the w.iii crest as a completed w.iv. If this wave labeling is correct, we should see a new high tomorrow.
However, I can easily make a case for an alternate count whereas today's price structure was a leading diagonal... w.i circle.
Finally, here is the ES1-057 contract. Again, I've labeled the structure as a completed w.iv and expect a new high. If w.v of w.(v) = .618 {waves (i-iii)} then the termination point is 132925 which is the same level that I called for on 2/7/11. Also note that the bollinger bands have contracted and that is an indication that tomorrow could exhibit volatile price action. So be alert for a directional trade set up.
As always, I'll let the price action tell me if my labeling is correct or incorrect. A decline below 131175 in ES1-057 and 131489 in the $SPX would mean that a near term top had been struck.
I hope you found this update informative.
Best of Trading
Hi Mike
ReplyDeleteThanks for all your thoughtful insight really look forward to your posts. Just a quick question when you calculate your price targets using wave lengths do you use percentage changes or the actual price change? When I trade using EWT I only bother with price But I beleive % change is the better I wonder whether it would make a difference to the price targets in your count of the S and P.
Thanks Again
Anonymous - I like you, use price and Fibonacci retracements / expansions to calculate targets. EWT doesn't use percent change. If you have developed a strategy that you feel works as well and consistently generates profit when targeting wave relationships then I would use it. As always, EWT isn't a trading plan, its best used to determine the context and position of the market. After that, traders are left to decide how to trade the market based upon their trade plan.
ReplyDeleteI hope this helps.