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Feb 16th, 2010: It’s a Beautiful Day…

Posted by pugsma on February 16, 2010

5:00pm EST:   if your a bull.  So many things to get excited about if your bullish on the markets.  First a 4 point gap up led to a 20 point (1.8%) bull rally today!  And the gap up helped to clear critical resistance in the 1080 area.  Next the 13-day EMA (1082) was shattered by this bull move today, which signals a near term trend change from bearish to bullish.  Third, the MACD got a bull cross late today and the histogram bars moved into positive territory.  Fourth the RSI moved up over 50.  Both MACD and RSI moves were forecast from the positive divergence I spoke of  yesterday and played out today.  Fifth, we have a potentional “Gap-and-Go” event today.  Notice the red circles on the Daily Candle Stick Chart showing what the “Gap-and-Go” event that occured in July 2009 after the 13-day EMA was broken to the upside.

Daily 13/34-day EMA Chart (EOD):

Daily Candle Chart with Indicators (EOD):

And the Leading Diagonal (LD) count on the 5-min Chart is looking quite good.  The 1085/90 target for wave iii of the LD was exceeded with the move up to 1095 today.  But it still fits the LD parameters.  One thing that could happen is that this LD could morph into a regular 5-wave impuse up for 1-[5]-P1 without any iv-i overlap.  We’ll have to watch the 1080 area close tomorrow to see if we get overlap or not.  A sudden drop belore 1080 would indicate the LD is still in play.  Whether or not this wave 1-[5]-P1 is a LD or just a normal channelling 5-wave impulse, the final result will be the same with new highs over 1150.  I still have a target in the 1097 to 1110 area later this week.  What matters is the depth of the 2-[5]-P1 retrace.   So determining if it’s a LD or not is the key to estimate the depth of the retrace that will come next week.  LD’s tend to retrace 62%/78% (1055/65 area) where an normal 5-wave impulse might only retrace 38%/50% (1071/77).

And of course for the bears out there (I don’t want to forget about you) there is still the altenate count (in purple) that has this wave “c of [B]” is complete or nearly complete and the big bad bear leg [C] is about to get underway with new lows below 1045.  Two key retrace levels from the 1045 low were hit today at 1085 (38%) and 1096 (50%).

Oh and how’s that diamond reversal pattern looking?  Hmmm….1097 d-leg target hit, check!  Next a e-leg down to 1075, then new highs over 1150.

60-min Diamond Resveral Pattern:

5-min Chart (EOD):

15-min Chart (EOD):

60-min Chart (EOD):

Daily Chart (EOD):

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