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Jan 20th, 2010: Watching 1130 Closely

Posted by pugsma on January 20, 2010

3:30 pm (CST):  Well for the first time in the last 10 months, I feel we are getting very close to an intermediate top that will lead to a significant correction in the markets.   Today’s lower, low of 1029.25 may every well have been wave (1) of A of the correction (see my red labels on the charts below).  It’s still possible that it was the e-leg of wave 4 of 5 of [5], but we did break two key support trendlines today.  Even if we do get one more pop above 1150, it’s likely going to be short lived.  As I mentioned in the 2:00pm update, we have 3 consective sets of 5-wave impulse (2 down and 1 up).  This strong suggests 1150.44 was the top for now.  I’ll be watching the 1140 to 1142 area tomorrow for a wave (2) re-trace, and if it holds I will pick up some SPY puts in that area.  Any decisive break-down of the 1130 level tomorrow or Friday, would help confirm that the top may be in.

5-min Chart (EOD):

15-min Chart (EOD):

60-min Chart (EOD):

2:00pm (CST):  With 1-hour of trading to go, the key level to watch to the upside is 1137.68.  A break over 1137.68 and this wave (1) corrective move down to 1129.05 has ended.  If 1137.68 holds, then this may only be the iv of (1) down and v of (1) down could drop to about 1125 (if v=i).  On the bearish side, if 1137.68 is taken out, then targets up in the 1140 to 1142 are likely on a wave (2) retrace.  And on the bullish side it could mean wave (1) of 5 of [5] is underway toward the 1160 to 1170 target.

One thing to notice in my new 5-min chart.  There are three sucessive 5-wave impulse counts in the last three market moves.  Thus, it is likely that 1150.44 was the intermediate term top.  As this can be explained with the first impulse down being c of 4 of [5] of P1, the second impulse up being all of 5 of [5] of P1, and finaly today’s impuluse down being (1) of 1 of A.  So, in this case P1 has topped at 1150.44 and we are in the beginning of a intermeidate term corrective that could last for a couple months.

5-min (2:00pm)

10:25am (CST):  Well we got a break of 1130 this morning, as the SP-500 hit 1129.25.  So far this move down is extremely strong and looks impulsive.  It’s becoming increasingly more likely that the intermediate top may be in at 1150.44 and this is a wave (1) down.  The ironic thing about yesterday’s strong impulse up to 1150.44 is that it did break to a new high above the wave 3 level of 1149.74, so technically this (5) of 5 of [5] of P1 could be complete.  They only hope for a new high above 1150.44 is that drop today is the e-leg of 4 of [5] of P1 and it completed this morning.  Thereforen now we are beginning wave (1) of 5 of [5] of P1 with a target to 1170 sometime next week.

15-min Chart (10:30am):

9:40am (CST):   There was a trendline break near 1135 this morning.  We need to watch the 1130 level very closely today.  A break below 1130 and I started to get more bearish with my corrective counts.  Right now, there is still a chance that today’s drop to 1133.05 was wave (2) of 5 of [5] or e of 4 of [5] and the SP-500 is set to rebound from here.  So far this consolidation range between 1130 and 1150 looks very similar to the 1085 to 1113 range from Nov-Dec.

15-min (9:40am):

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