Thursday, October 20, 2016

All Along the Watch Tower

So, we were expecting downward movement for today, and that's what occurred initially. First here is the continued potential diagonal, as we counted it today in live chat. Price is still following down the upper diagonal trend line quite nicely. At this very moment there is no reason to abandon the count.

SP500 30-Minute Potential Diagonal Count Still in Progress

But what happens if price surprises us in a big way to the upside in the next few days? Well, we just need to be on the watch out. Today, during live chat I showed this alternate - which I think has the best possibility of playing out in the event a large seemingly unexplained movement upward occurs.

SP500 4-hr ALTERNATE - still in a barrier triangle

Because the minute-d (circle d) wave lower did not make a new closing low, then this count would still follow the rules and guidelines for a barrier triangle. This triangle suggests it is 'possible' to pop higher in a minute-e wave (circle e). But, then, if that is the case minute-e must cross back up over the minor A wave to be corrective to it.

If any any time a four-hourly bar closes below the barrier, then a barrier triangle would likely not be the count, and something more indicative of lower prices would be. We would cover those options later - should that occur.

For now, other than keeping a close eye on things, the current diagonal count lower is acceptable. But most people will agree price is quite whippy. We will also provide that the daily moving averages are currently in the bearish configuration, with the 10-day lower than the 20-day, and the 20-day below the 50-day, as below.

SP500 Daily - Bearish Configuration of MA's

While we are getting conflicting intraday signals, today's movement was all about whipping prices about the 10-day SMA, with the close right on it.

So, patience and flexibility are still needed - especially when we can see two very clear options.