S&P 500 - Waves - September 18, 2010

On September 6, I posted 3 possible counts for S&P

Unfortunately, all three counts are still valid. Let’s see how they have fared

I) Bullish Alternate



Still on track. If correct, the area under 1040 shall not be seen for quite some time. That would define risk for all-out bulls on any new position.

PS. after posting, I thought I could break what would be intermediate 3 (purple) into its minor (dark blue) waves. I am not predicting exact wave positions, just showing woul-be internal waves. Another reason is that if divergences and breadth softness cause a correction next week, under this count, it would mark end of minor wave 1.

II) Up and Down Alternate


A very tricky count, depending on how index does here. If this is the correct count, and if index breaks out above the August peak, it will drag in a lot of underinvested bulls and some undecided parties before it turns around and hurts them on the way down.

II) Bearish Alternate



If this is the count, we should see a reversal soon. Mind you, under EW, it can rise and give us an irregular B (or is it a running B?). I would keep an eye on the mid-line of the channel to see how index performs there.

There can be more, but these three are good enough for me for now. Give the internal strength and widening breadth, I have mild preference for the first two. If either of the first two comes to pass, August peak will be bettered.

In the post of September 6, I said:

“if I had to choose, I would say market breadth suggests a higher probability for the first two. If either of the first two comes to pass, August peak will be bettered. If I wanted to speculate for that, I would start thinking about some calls or spreads, October or November, targeting 1130-1140 (or higher depending on my degree of bullishness).”

Seems to have been an OK play with those calls and spreads

I still have a preference for the first two, but I not biased.