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Jan 29th, 2010: Watch 1091 to 1093 Area Today

Posted by pugsma on January 29, 2010

3:00 pm (CST):  The low this afternoon at 1071.59 tagged the lower boundary pefectly of the Ending Diagonal pattern (see 5-min and 15-min charts).  I first posted about this wave (5) ED yesterday and then again this morning.  So, it looks like v of (5) of A is complete per the e-wave count.  I expect a counter trend bounce for wave B to begin early next week that could challenge the 1115 to 1120 resistance band.

One thing to keep a close eye on next week, if we get a strong counter trend rally towards 1115-1120 resistance band, is that alternate count (shown in purple in my 15-min and 60-min charts).   This move from 1150 to 1071 can be viewed as wave 2 of [5] of P1 with a 62% re-trace of the early Nov to early Jan rally from 1029 to 1150 for wave 1 of [5] of P1.  In this case new highs above 1150 for wave 3 of [5] of P1 would be on the table as we more into Feb-March.   And if we continue to drop down towards the 1029 support area and it holds, there is an alternate count that would have the drop as [4] of P1.   So before getting too bearish about 1150 being long ternm top, watch the alternate counts and the key resistance and support bands.  Check out the 60-min chart and Daily Bull Model for the a clear picture of the alternate counts that could rally the SP-500 to between 1200 and 1300 later this year.  Of course the primary is that 1150 was the top of P1 and we could get a much deep P2 correction lasting for serveral months to all of 2010.   And I would say that all three scenario’s about equally probable until we learn more about this correction.

5-min Chart (EOD):

15-min Chart (EOD):

60-min Chart (EOD):

Dialy Bull Model (EOD):

11:00am (CST):  Even with 1096 being hit there is still the possibility of the Ending Diagonal pattern for wave (5) of A.  It’s just means that it will likely end around 1071 to 1075 just below previous low of 1078.46.  See my newly updated 5-min Chart below.

5-min Chart (11:00am):

9:15 am (CST):  1093.38 hit.  But possible bear flag on 1-min chart for wave iv of (5) of A.  Watch for a break-down or break up from here.  1093 is a key pivot for this morning.

1-min (9:15am):

8:00 am (CST):  After hitting the top of the pink up channel line at 1092 on the 5-min chart late yesterday 1/28 the SP-500 sold off hard all the way down to 1074 (ES 1070) around midnight last night.  The overnight 1074 level (1070 ES) could be viewed as the wave v of (5) of A end diagonal finishing point.  And now the SP-500 has bounced up to about 1091 (ES 1087) this morning.  So it’s right up against the upper pink channel line again.  If the SP-500 breaks over this upper channel line today, the B-leg up to 1100 to 1105 could be under way.  If it fails here, then more downside in the cash market could follow today.  So it bares close watching all day long.

Here is the key 5-min chart to watch today.


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