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Jan 7th, 2010: Broken Wedge & Signs of Weakness

Posted by pugsma on January 7, 2010

As hinted in yesterday’s late day message, the 3rd bearish rising wedge was busted in early morning action today.  It could be back tested before finally giving way.  While I’m not ready to call 1139.18 the intermediate top just yet, there are growing signs of weakness in the SP-500, Nasdaq, and Russel-2000.   I think a key level to watch for today is the 1125 area.  This is gap support from the Jan 4th pop up off 1115 and it’s also the area of the lower channel line for this current 5-wave move up off of 1086.  If this 1125 area is taken out decisively, the top may be in for a while.  The next gap supports after 1125 are the 1113 to 1115 and 1103 to 1105 areas.  The 20-day SMA is currently at 1118 and 50day at 1099, so these gap supports correspond to SMA support as well.
5-min Chart:

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