6:41am
The Euro continuing to get stronger against the dollar and the dollar weakness is definitely helping the markets prop up even further. But we all know what’s going to happen at 8:30am.. no matter how you slice it, this is the news everyone was waiting for the whole week – Employment situations.

Also at 10am, very important is the non manufacturing ISM.

If the SPY does not react badly to any of this news, we will hit 110.00 today, that should be some resistance for at least a few hours or a day.

Today was one of those days where you just stare at the chart and wonder what the heck went wrong. It’s the type of day where you think of all the time and effort that went into your counts only to have them rendered useless in one swift updraft of buying. One commenter called EWT useless after today’s move. How tempting it is to throw in the towel and agree that EWT is just too darn fallible.

Regardless of your opinion on this, admit it was interesting that exactly when the S&P violated the Minuette (iv) CANNOT CROSS line, the market exploded higher on strong volume. Looks like too many people were on one side of the trade and there was a mass exodus out of the short camp. I repositioned my trading account to a neutral state until I figured out what the heck was going on. When the market does something you don’t expect, you must get smaller and reevaluate the situation.

After some reflection, here are my thoughts. This is the type of post that gets readers annoyed and even angry. I cringe just hitting the Publish button because I know  most people will say I’m ignoring the price action and simply using creativity to find a count that fits my stubborn outlook. If there was one day in the past 3 years that I have been tempted to turn bullish, it was today. And that is why I know it’s time to be more bearish than ever.

This count is borrowed from DanEric who is a stubborn Bear just like me. It shows Minute [i] finishing shy of its 1010 target, sporting an extended fifth wave. Sure, it’s not ideal, but it’s a valid wave count with no rule violations. According to Prechter, corrections after extended fifth waves usually complete near wave two of lesser degree. Well, that’s pretty much where we are now indicating Minute [ii] is just about done. This target lines up pretty well with the 50% retracement too.

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Find out which is the 2nd most overbought stock here

1:08pm
It looks like we could have a reversal in the EUR/USD forex as the dollar is strengthening. to confirm a true reversal, we need to see 1.2795 breakdown, and then a new low below that of 1.278.

12:08pm
The bears have not really showed any conviction yet, this does give the bulls another chance to shove us higher… right now, no reason to short this market at all. I’d rather stay on the sidelines or buy on any small dip in individual stocks.

11:06am
One of the most overbought stocks in the market RIGHT NOW is … CRM. If you look at the weekly chart below you will see why. Alerts & Analytics has it’s reasons for taking it short, if you want to join in, you might consider an october put spread.  The chart is below.

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3:00pm
Eur/Usd charts have been really helpful in predicting SPY movement. Whenever Euro gets stronger (Eur/Usd up) then the SPY is likely to follow, the same for the opposite. Eur/USD showed a lot of strength before this rally… now it looks like it’s getting weaker, and possibly got it’s H&S formation on the 1 min:

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My primary count of a Minuette (iv) triangle still looks fine. However, I am prepared for a move lower in case (iv) has already topped out. It’s important to keep an eye on the bigger picture and not get too caught up in the squiggle counts.

S&P 10-Minute

S&P Daily

According to EWT, Minuette [i] should advance prices beyond the Minor 1 low, just as Intermediate (1) should advance prices past the Primary [1] low under 666. Notice the large head and shoulders pattern on this chart. The negative sloping neckline is very bearish.

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3:32pm
Israel might have found Oil in the Mediterranean sea near where they found natural gas last year. How significant is that for Israel, and what are your thoughts on how this changes the Israel’s economy and future?

2:43pm
Incredible market action here to the downside.. it’ll be interesting to see where we end today another test of 104.65 within the day will be very bearish for tomorrow.

2:21pm
The reversal time is here.. and now the bears are trying their hardest to push the market down with a H&S on the 5 minutes as the bulls fail to break 105.80-106.00.. a break of 105.30 is needed to confirm the H&S:

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This count was proposed on Friday and looks good so far. Subminuette b has retraced just over 61.8% of Subminuette a. The b-wave may have a little more downside to go, or it may not.

Counting corrective moves is challenging, and counting triangles is especially difficult, so I don’t really care exactly where we are. It will become clear soon enough. I am having trouble finding a count that supports a Minuette (iv) flat or zig-zag, but that possibility does exist. The alternate count is that Minuette (iv) already topped out  -  see DanEric’s expanding triangle count.

As a trader, I want to be prepared for (v) down, which should be a decent size move. Given that (i) = (iii), both about 60 S&P points, it suggests that (v) will be an extended wave, moving greater than 60 S&P points.

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2:58pm
SPY 1 minute descending channel right now:

1:01pm
GS continues to fall here just as we predicted. Even $140 didn’t form any support, it formed resistance (consolidation) and opportunities to go short for some more downside. I see GS going to new lows and hitting $120 very very soon. $140 should have held if GS were to try and make new highs anytime soon. Here’s the 1 hourly:

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I admit that today’s strong market internals put the Bearish Count into question. On the NYSE,
Advancers/Decliners = 6.59 / 1     and     UpVolume/DownVolume = 12.75 / 1

Who said this market would be easy? It felt like there was lots of short covering today, which might have been needed to alleviate some of the bearish sentiment.  Here is what Bears are looking for on this 10-minute chart of the SPX. There are few catalysts next week until the Friday employment report, so a choppy triangle next week does make sense. Today’s rally makes a nice 3-wave pattern, which suits the a-wave of a triangle.

EWT Lesson: Today’s rally looks like a bearish wedge but those can only be found in fifth or C waves. It is not the c-wave of a flat because subminuette ii is already a flat, and you cannot have two flats in the same 5-wave pattern. Subminuette ii must be a flat for this bear count to work. Otherwise, subminuette iv would violate the price territory of subminuette i.

Notes
This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

9:26am
GDP revised down 1.6%… which is still better than expected. The spy though is off it’s highs.. will be an interesting day.

Poll of the day – Open till 8:30am

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5:45am
Here’s a daily chart of AAPL… we talked about what happens when $240 breaks. And we are right on the verge of breaking it again. The first time was a strong fakeout due to a reversal in the markets, this time we might be ready to fall all the way to the daily 200 SMA at $231+. The only thing that could save AAPL after the break is if it comes out with news about the new iphone sales. For now here’s the chart: