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Oct 30, 2009 – Possible Head & Shoulders Target

Posted by pugsma on October 30, 2009

It’s always good to look at both bullish and bearish alternatives.  Assuming this correction goes deeper than my target area of 1000 to 1010 for Wave [4], I want to present a more bearish head & shoulders target option.  The head being at the 1100 area.  The upward sloping neckline in the 1020 to 1030 area (average of 1025). Target for the H&S pattern is 1025-(1100-1025)=950.  950 corresponds roughly to the area where the 200-day SMA will be later in November.  This also would correspond to a thrid parallel channel line off the 666 March 2009 low.  The existing lower channel line would become the mid-channel line.  So if my 1000 to 1010 target at the existing lower channel line does  not contain the correction, this new target area around 950 in late Noverber should do it.

My primary count is still the A-B-C correction down from 1100 to about 1000 (10% correction).  This is the same type of A-B-C correction we had back in late June of 2009.  The A-leg should be about over here at 1030.  The B-leg may test the lost wedge line at about 1070 to 1080.  Then the C-leg back down for C=A to about 1000 to 1010.

Pontential Correction Magnitudes:

Late June 2009 Correction:  956 to 869 = 87 points or 9.1%

1st Target (Thus Far):  1101 to 1033 = 68 points or 6.2%
2nd Target (1000):  1101 to 1000 = 101 points or 9.2%
3rd Target (950): 1101 to 950 = 151 points or 13.7%

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