S&P 500 - Closing in on the top

The above chart shows the weekly S&P 500 since August 2008. I still see the rally since early March 2009 as a correction and not a new impulse, therefore I have count the rally from 666.92 to 1,219.61 as wave A. Looking at wave A you will see, that wave 1 of A took 14 weeks, while wave 3 took twice the time of wave 1 = 28 weeks and finally wave 5 was a bit short and took only 12 weeks.

Looking at the rally since the wave B low at 1,011.52. it's possible to count a five wave rally, which makes the upside limited at this point.
The ideal top for this rally would be in the area from 1,289 - 1,291. If we look at the waves since the 1,01152 low wave i took 5 weeks. Wave iii took twice the time of wave 1 = 10 weeks. If the relationship from wave A stays the same then wave v should take the same amount of time wave i took = 5 weeks, that amount of time was spend with the close on December 31 - 2010. So from a time point of view a top could be in place with the 1,262.58 high.

If a high is seen we should soon see a decline towards the 1,166 - 1,173 area.

However due to the principle of alternation it might seem more likely that wave v would take longer time than wave i and extend the rally towards the ideal target area in the 1,289 - 1,291 zone. But be aware that we can count five waves at this point in time, which does limit the upside potential from here (if any...)

The chart below is an hourly chart of the rally since 1,011.52 low (B).
The aggressive trade would stop longs out just below 1,251.48 and maybe even try a small short position with a close stop above the 1,262.58 if support at 1,251.48 gives away.
The less aggressive trade would hang on to longs for a move closer to the ideal target area in the 1,289 - 1,291 zone or wait for a break below 1,241,54 before closing longs and maybe even initiate a short position with a stop just above 1,262.58.

Happy New Year and a prosperous 2011

DAX Index - Topping?

The German DAX-Index could be topping. On the weekly chart above the Stochastic indicator is rolling over in overbought territory. The long term Rate of Change indicator is still bullish, but this indicator is a lagging indicator, and it will never catch a top or bottom.

Looking at the rally since March 2009 bottom at 3,588.89 to the top last week at 7,087.84, there is some very interesting relationships. First the rally from 4,524.01(point "B") to 7,084,84 is almost 1,618 times longer than the rally from 3,588.89 to 5,177.59 (the exact point is 7,094.53).
Time wise the rally from point "B" to the end of this week has taken 76 weeks, which is 4.236 times longer than the rally from the beginning at point [A] to point B, which took 18 weeks.

A break below 6,657.98 is needed to confirm the top, but the evidence of a possible top is compelling.

Crude oil - A top now or just half way?

The weekly chart above shows the correction since the low in late January 2009. The last part of the correction since the low at 64.24 (late May 2010), does display some very interesting relationships.

The daily chart below show us, that the rally from 64.24 to 82.97 took 52 days the following correction corrected just above 61.8% of the rally. The next rally from 70.76 to 88.63 took 54 days and came close to the 50% retracement of the major decline from 147.27 to 32.40 (89.93).
The correction from 88.63 corrected 50% of the rally from 70.76 to 88.63 and we are looking at the third rally from 80.06, which has now reached the mid-point time wise as it has taken 27 days.
Could the rally be over? Yes it's a possibility, but it would at least take a decline beneath 86.83 to imply that. It's more likely we will see a continuation higher towards the 96.60 - 97.00 area over the next 26-27 days before ending the entire rally from 64.24. But stay alert if 86.83 gives away.

EUR/USD - Still working on the correction

There isn't really much to add here. The correction that started at 129.64 is still ongoing. The "X" wave became a little deeper, which could mean that we will see a top near 135.27.

The most important question is still if the decline from 142.81 was just an A-B-C correction or an impulse, where we currently is working on wave 4. that will be decided if we see a close above 135.72, as a close above here will leave us with an overlap between wave 1 and 4, which is not allowed.

Shanghai Composite - Wave 3 down?

I still regard the decline since early August 2009 as wave [C]. If this count is the right one, then we have just started wave (iii) of 3 of 3, which should be the most powerful of the declines in the [C] leg down.

A break below 2,687 will confirm the rally since June 2010 was corrective and should confirm a decline below the June 2010 bottom at 2,320 soon. Wave (iii) should ideally decline to 1,510.

S&P 500 - More upside to come

Having broken clearly above 1.247,00 odds favors S&P 500 continuing higher towards at least the 1.289 - 1.290 area.

The clear break above the 61.8% retracement target for the decline from 1.576.06 to 666,92 has moved focus towards the 78.6% correction target near 1.382,91 and then close to the 1999 and 2007 tops in the 1.553 - 1.576 area (likely slightly above - See the chart below).

Looking at the internals of the current rise from 1.011,52 in early June we should see a minor top in the 1.289 - 1.290 area calling for a correction towards 1.172 - 1.173 area before the next rally.

A top near 1.290 followed by a decline to 1,172 would also fit the Armstrong & Brenner cycles, which are calling for a top in 2010 followed by a bottom in April - June 2011.