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May 11th, 2010:

Posted by pugsma on May 11, 2010

5:45pm EST:  All the conditions were met for 5-waves up on the primary count wave-v-C-[B]-P2.  The 1170 level was hit, which is inside the resistance band of 1168 that we been watching.  And there was rejection of prices at cluster of moving averages (13-day EMA, 34-day EMA, and 50-day SMA).  Thus the primary count is that we have started down in wave [C]-P2, namely wave (1)-[C]-P2  The first target is to break the 1129.32 level (wave i-C-[B]-P2 peak) and head towards the gap support of 1121 go 1110.  One cavet to this primary count is a possible consolidation triangle that could form between 1150 and 1170 for wave-iv-C-[B]-P2 if prices decide they need one more puch higher.  The triangle target would be the 1190 area.

The alternate count is that wave (5)-1-[1]-P3 is completed and we are headed down for a retrace in wave 2-[1]-P3.  The retrace target is the 1110/21 gap area or a 50% retrace.  This alternate count is subject to same possibility of the wave (4)-1-[1]-P3 consolidation triangle if price decide that one more push higher is needed.  Target is the same 1190 area.

What will separate the two counts is what happens once the 1110/21 gap area is reached.  The primary count will continue to new lows below 1067 fo the completion of [C]-P2 and the alternate count will head to new highs above 1220 for the wave 3-[1]-P3.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

12:40pm EST:  Here is the daily candle stick chart showing resistance in the 1168 to 1177 area.  We have our new high for wave-v-C-[B]-P2 as expected.  So far we reach the 1168.04 level, which is the start of a key resistance area.  Going back to my comments from the EOD yesterday, I have the first target for this wave-v at 1174 (v=0.62i), a second target at 1182 (78% retrace), and third target at 1190 (v=i).  Let’s see how far this wave wants to run up.

SP-500 Daily Candle Chart (12.27am):

11:15am EST:  There has been some good discussion the last few days on trend change models vs E-wave analysis.  The trend change model I like to use the the 13-day vs 34-day EMA cross-over.  As long as the 13-day EMA remains on top of the 34-day, we are in a up trend.  When it crosses under we are in a down trend.  The last bull-cross was on Mar 1st, 2010.  And we just got a bear-cross on the May 6th, 2010.  This is one reason I’m still favoring the primary count that we are still in P2 as the May 6th bear-cross indicated a trend change.   If this [B]-P2 wave dies out in this 1164 to 1182 area in the next fews days, then we should not get a new bull-cross and may head back down in the [C]-P2 wave to new lows below 1067 (First target is 1010).  Also, remaining below the 13-day EMA after the bear-cross is very typical behavior.  Right now the 13-day EMA is around 1170 and falling.  However, if we can get above 1170 and more importanly above 1177 and remain there for a few days to week, then a bull-cross will likely be triggered and my alternate count will start to take over.

SP-500 Daily 13-day vs 34-day EMA Cross-Over Trend Model (11:15am):

8:30am EST:  ES Futures have traded down to 1040.50 (1143.30 cash equiv) overnight.  It looks like wave-iv-C-[B]-P2 as not complete and yesterday’s drop to 1148 was only wave-a of iv. Then the late day push to 1160 was wave-b of iv and now we are working on wave-c of iv down.   The key level to watch for the primary count up to continue upward is the wave-i high 1129.32.  If we trade above this level then wave-v-C-[B]-P2 can still reach more targert area of 1174 to 1190.  For the alternate count the key level to stay above is 1137.24 for wave (4)-1-[1]-P3 and then wave (5)-1-[1]-P3 can continue upward.

SP-500 ES Futures 60-min Chart (7:25am):

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