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Jan 22nd, 2010: Falling Wedge?

Posted by pugsma on January 22, 2010

5:00pm (CST):  I wanted to add an alternate count (purple) on the 5-min chart that has wave (3) of A ending late today at 1090.40.  And we could get a wave (4) of A to about 1105 on Monday.  Then a final push to 1085 for (5) of A.

4:25pm (CST):  As I mentioned in the morning update as a possibility, it’s clear now that the morning low 1104.93 was only wave (3) of A.  Even though today’s bounce to 1115.49 was not long in time, it could be considered wave (4) based on it’s corrective structure.  The impulse down in the afternoon was likely iii of (5), which ended at 1090.40.  I believe we have iv of (5) and v of (5) yet to come on Monday.  Wave v of (5) of A could reach the 1085 support area.  I’m looking for the B wave of this large corrective to re-trace back up to around 1120 to 1130 over the next one to two weeks.  And Wave C down to be reach levels in the 1050 to 1065 area by early March.  This C leg of the large correction end near where the 200-SMA will be at that time.

If you did not have a chance to get out of your long positions during the bounce to 1123 yesterday or to 1115 today, then you should be about to get out of them during the B-leg up.  And if you played the market short after the drop below 1130 or 1115, then you can look to cover at the end of the A-leg around 1085 to 1190 early next week.

Enjoy the weekend !

5-min Chart (EOD):

15-min Chart (EOD):

60-min Chart (EOD):

Daily Bull Model:

Daily Bear Model:

10:40am (CST):   The 1100 to 1110 target area was hit this morning at 1104.93.   As I mentioned in the pre-market comment, it’s possible that wave (4) of A was in yesterday at 1123.  And we completed (5) of A this morning in a falling wedge pattern.  However, we need to watch to see if a larger and longer in time wave (4) devleops (see alternate count in purple).  In which case today’s low of 1104.93 was only the end of wave (3).  This wave (4) could take the SP-500 back toward the 1116 to 1118 area and fill the gap down from this morning.  Then a wave (5) of A would target the 1095 to 1100 area.  If (5)=(1), then A would end around 1097 assuming 1118 is hit for wave (4).

5-min Chart (10:40am):

8:25am(CST):  Just took a quick look at things again this morning.  The wave (4) maybe already be in at 1123 and we are now in (5) of A with a 1110 to 1100 target.  Key support at 1107.

5-min Chart (8:25am):

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