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Here are a few charts I am looking at after Thursday's dramatic reversal. Click on any chart in this set for sharper image.
$HUI Daily Chart
The $HUI held well above its low although the price of gold (see chart below) did not. This is a bullish divergence for the $HUI if there is follow through.
Gold Daily Chart
$OSX Oil Services Daily Chart
$WTIC Crude Daily Chart
Crude made a new low but the oil services sector did not. Once again this is a bullish divergence if there is follow through.
S&P 500 Charts
It was a wild ride in almost everything Thursday but especially the S&P 500 which undercut the October low then scorched higher into the close. No this was not the footprint of the PPT, this was market participants reversing direction after stops were cleared on the downside.
S&P 500 Futures 15 Minute Chart
Note the volume that came in during the reversal. Much stronger than anything during the decline the two previous days.
S&P 500 Crash Count Where Are We?
People keep asking for an update on the S&P 500 Crash Count. In case you are new to the topic please see S&P 500 Crash Count and S&P 500 Crash Count - Wave 3 Update.
The reason why I have not given an update recently is there are many scenarios in play.
A couple days ago David Waggoner on Minyanville had this to say.
A Triangle, Flat, Expanded Flat, or Zigzag. These are options for a 4th wave and all of them are still a possibility. I have also seen expanded flats where the B wave is a double zigzag, so there is yet one more option!I am not going to draw or even explain those options other than to state that E-Wave is subject to interpretation and when there are too many options it can get confusing. The benefit many times is simply in knowing whether or not one is in a corrective wave or an impulsive wave.
If price bounces hard between here and 894 and turns up, then the Expanded Flat or Zigzag are candidates for consideration. If we go near the low and turn up strong, the Zigzag and Expanded flat are still possible, but the Triangle increases in probability.
Relentless selling accompanied by a clean break of the low and the 5th wave scenario is a strong candidate.
In my opinion, none of these options have confirmed yet. Although it is only a handful of options instead of unlimited possibilities, there is enough uncertainty to provide serious damage if you are on the wrong side of the trade. Been there done that.
It is now likely that the count I posted previously as the favorite was incorrect. I am not going to go into the details of why, but today's action smacks of a truncated 5th wave down and IF the new count as show below is valid then the bounce that started Thursday may be a multi-week rally.
S&P 500 Daily Chart
The above chart shows wave 3 (1 of 3 through 5 of 3). Let's take a look at the weekly chart to clarify things a bit.
S&P 500 Weekly Chart
Previously we surmised that wave 3 was complete.
It now looks like wave 3 completed on Thursday November 14 but that is still not certain.
Note how waves 4 of 1 and 4 of 3 are a tangled mass of jello. It is possible we are still in jello or it is possible we had a short (truncated) 5 of 3. That seems likely but it is by no means certain.
Let's put this all into perspective with a monthly chart.
S&P 500 Monthly Chart
On the monthly chart assuming wave 3 of C has finished, we are now in a wave 4 of C up. Timewise 4 of C up can last a lot longer than most bears think. And like the wave 4's on the previous charts it is likely going to be a mass of jello with an upward bias. When it ends, wave 5 of C will begin and it is likely to be long and strong like wave 3 of C.
Once again, it is entirely possible wave 3 has not ended. If it hasn't, there is still more downside business to finish before heading back up in wave 4. If it has finished then I believe metals and energy will outperform. There is a lot of IFs above, so do not get married to any of this.
Mike "Mish" Shedlock
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