10 Oct 2014 ... And There She Goes...

Turns out the 10th of October date I had indicated was not a bottom or a CIT but rather an acceleration.  The bears are still in control, but I would think the run would need to rest at the least.  The ES futures was still chugging downwards right after the closing bell.  The price ended up in the 1893 range.  So we will have to see how the SPX reacts on Monday.  The positive divergence I have been waiting for has finally showed up, therefore I would think that the oversold condition should be close to ending.

I would like to see our target taken out earlier in the week next week and the reason is that it would fit with our indicator diverging with the current accelerated price.  Of course we could keep staying oversold for a while and prices would keep accelerating down.

A few things to note of why it would be a good idea for prices to rest is that the 200ma of the SPX is where price sits right now.  The rule of the 200ma holding would be that prices cannot stay under the MA for at least 3 consecutive days.  If the 200ma is truly a strong signal, then it wont just push down below it like it had no reason to be there in the first place.  Price must acknowledge this line like it did today stopping just above it by days end.  A drop down and a rise up would give us a tail that would resemble a reversal candle of sorts.  Therefore the target we are looking for is in the 1900-1880 range. 

I would assume that many investors will be taking the weekend to look at their portfolio and see if they can weather the volatility and would ensue in some selling early in the week.  This is just my thought.  So far, our EW count has not changed, but there is a count that I have not taken to much time to evaluate.  This would be the 1-2, I-II, i-ii count (which would have us in a current iii-wave down).  This is possible, but it is not my favourite.  That said, once this bottom has been set, I can think of 2 counts that I would say is my favourite, but lets get there first before I reveal to many things all at once.

I have not seen anyone in the EW community that has had a very successful count as I have done in the past week.  I don't claim to be an expert, and it is hard even for me to get every count right due to its probabilistic outcome.  The odds will always be against the analyst.  One thing that helps for those who are looking to get into the EW analysis is to not get fixated on the count itself but more on identifying the pattern as either impulsive or corrective.  This I feel helps more in determining the importance of the EW structure.

MT: DOWN
ST: DOWN
PA: DOWN