8/2/11 - Batten Down the Hatches

Yesterday I expected that the SPX would move upward a little in Submin ii before reversing intraday in Submin iii.  There was no such upward movement; the 1288.62 reached yesterday afternoon remained unbreached.

My chart yesterday did predict, however, that we should probably move lower today.  And we did.  Substantially, and in spite of the debt deal being reached.  (A debt deal that, it should be pointed out, does just about nothing, and under which the debt still grows to $21 trillion by 2020... but $21 trillion is better than $30 trillion, I suppose.)

Today's decline, especially the last hour of it, had a very "capitulation" feel to it, which is characteristic of a wave 3 (and I do have this as Submin iii of (v) of [iii]).  Given the uncertainty of figuring out exact wave counts in that sideways opening to this decline, it might actually be iii of (iii) of [iii].  Note that the breach of the 1258.07 June 16 low invalidates a few intermediate-to-large-scale wave counts (e.g. the Minor 4 triangle).

However, Minute wave [iii] now is 92.95 points in length, 1.535 times the length of my Minute [i].  At 97.99 points in length (corresponds to SPX 1249.01), it will be exactly 1.618 times Minute [i] and this is a logical spot for the end of Minute [iii] (though by no means the only possibility).  If this is the case, Subminuette iv should be starting soon, and might take the form of a gap up (we ARE a bit outside our Bollinger bands) followed by a reversal back down in Subminuette v.  1274.73 is the critical value for the Submin count.

Minute [iv], when it starts, should not exceed 1295.92 which is the Minute [i] low.  Note that at the current levels, a 38.2% retracement would take Minute [iv] to 1288.77; from 1249.01, this retracement would be 1285.57.  Neither would breach.

Also, KRAP down 47.53 at 1606.11.  All components fell 2% or more (well, okay, AAPL fell 1.98%, but...).