Jan 23rd, 2010: Aug-Nov Support Line
Posted by pugsma on January 23, 2010
3:30pm (CST): Just to simply things, forget about the EW counts and bull vs bear, and take a look at the Aug-Nov 2009 channel. Higher highs and higher lows. If you traded this channel over the last 6 months you be a lot wealthier today. Will this channel hold up going forward? We find out next week, as a critical level of 1080 is right on the horizon.
Daily Chart wth Aug-Nov Channel:
1:00pm (CST): After a market chaning event like the 60 point (-5.2%) drop this past week from 1150 to 1090, it’s always a good idea to step back and check for some under-lying support. I spent a few hours stepping back this morning to look at the longer term support lines from the late July 2009 to Jan 2010 rally. There is a very important support line from Aug-Nov that is sitting right at about 1080 as the EOD on Friday, Jan 22nd. It’s very possible this support line will come into play next week. I expect this current 5-wave A-leg down to stop in the 1080 to 1085 area. Assuming we get B-leg rally to about 1130, there are three scenario’s that I see. Here they are in ranking order of bullishness:
Scenario 1: This ABC correction has C=0.62A. C ends around 1090 on the Aug-Nov support line. This could then be a 2 leg of [5] of P1 and we move much higher into the summer.
Scenario 2: This ABC correction has C=A. C end around 1065. This could viewed at the wave [4] of P1. And we move higher in wave [5] of P1 into the summer.
Scenario 3: The is ABC correction has C=1.62A or even C=2.2A. We are looking at potential P2 drop to the 965 to 1040 area that last through most of the spring.
60-min Chart (Jan 23rd):
Daily Chart (Jan 23rd):
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