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Mar 31st, 2010: Will March End as a Lamb (Bear) or Lion (Bull)?

Posted by pugsma on March 31, 2010

5:10pm EST:   However the primary count remains that the large wave 4-[5] triangle is still in play. There is always a possibility of a little more of a down side fake-out, maybe to the blue channel line at about 1164/65, before the continuation higher.

4:20pm EST:   So the answer is that March ended like a Lamb (Bear).  And since it came in like a Lion (Bull), it confirms that the Markets are indeed just like the weather, ever changing.  πŸ™‚

There was a break below the lower yellow triangle boundary in the last hour of trading. This could be a fake-out. However, I do think the alternate near term bearish count (in red on 15-min chart) of the 3-3-5 flat for wave 4-[5] gained some momentum today. Also, there is chart pattern from the aggreesive July to August 2009 bull run-up that is very similar to the last few days, and a gap down with a 20 point down day followed.  I do think that is a reasonably good possibility for tomorrow, with the wave 4-[5] flat option targets sitting at 1159 and then 1147.  That type of back-to-back down days would help reset the RSI (now at 66) back near 50 and allow room for the wave 5-[5] run-up to begin.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

11:30am EST:   This further consolidation between 1166 and 1175 is just what is needed to set the stage for next run higher.  See the daily candle stick chart.  The RSI is down to 67 and it would be good to get to down to about 60 to 63 before the wave 5-[5] charge to new highs.  This consolidation around the long term 1168 and 1177 pivots is a mini-version of the Dec 2009 consolidation pattern.

SP-500 Daily Candles (11:30am):

10:25am EST:  The lower yellow triangle line at 1166 held support very well early this morning.  The primary count that we are in a wave 4-[5] triangle is still in play until 1161.48 is breached.  Here is the updated 15-min chart with this mornings price action.  I would expect some some more consolidation in the 1166 to 1175 band before a break out over the 1175/77 area can occur.  The SP-500 many stay in this band the rest of this week.  Any breach of 1161.48 would be near term bearish and mean the wave 4-[5] flat option is in play.

SP-500 15-min Chart (10:25am EST):

12:30am EST:  On March 1st the market came in like a Lion (Bull) and the SP-500 gained 11 points to rise from 1105 to close at 1116.  This was a key day for the SP-500, as it closed over the 1112 resistance point and never closed back below 1116 for the rest of the month (see chart below).  Yesterday, March 30th, the SP-500 closed at 1173 (up 68 points or 6.1%).  Quite an impressive Bull Run during March.   And this followed on the heels of the 1045 to 1105 (up 60 points or 5.7%) bull run in February.

So what is in store for the final trading day of March?  Will the Lambs (Bears) have their way or will the Lambs be led to the slaughter yet again?  It really is a basically a toss-up and could break either way tomorrow.  I have a new 15-min chart below that shows a near term bullish, a near term bearish, and a near term nuetral count.  The near-term nuetral count is my primary count that has the E-leg of large wave [4]-5 triangle playing out over the next day or two in the 1166 to 1175 range.  And then eventually breaking out to new highs on a push towards 1230 for wave 5-[5].  The ultra-bullish near term count shows an immediate move higher tomorrow towards 1190/1200 in the 3rd wave of (5)-3-[5].  And finally there is a near term bearish count that has a 3-3-5 flat for wave 4-[5] playing out off the 1180.69 high.  This count was the 5-wave C-leg down underway with targets at 1159 and 1147.  The ADP jobs report before the market opens should set the tone for the near term direction.

I really don’t like to hedge and show all there options, but this is one of those times where the market is sending us mixed signals near term.  Intermediate term, I’m still calling for a wave 5-[5]-P1 to at least 1230, so even if a pull-back to 1147 happens, it will just be another buying opportunity to add to long positions.

SP-500 15-min Chart (3-30-10 EOD):

SP-500 Daily Candles March 2010:

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