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May 12th, 2010: Wave Extension?

Posted by pugsma on May 12, 2010

6:30pm EST:  Nothing has changed my thinking with today’s action. Bear flag is in play. Still looks like it’s trying to wedge it’s way higher in this wave-v-C-[B]-P2. My minimum target for this wave from several days ago was 1174 (wave-v=0.62*wave-i). We almost got there today hitting 1173. There is room to wedge higher tomorrow to about the 1177 pivot. The price did cross the 13-day EMA (1168) to close at 1172. However, the 34-day EMA and 50-day SMA are both sitting at 1173 and resisted upper price movement today, similar to the behavior in Feb. I don’t see anything impulsive in the price action on the triangle break-out above 1168, so I’m not sold on the triangle idea. Of course a gap up open could change that tomorrow. If that happens, then the triangle targets are in the 1182 to 1190 area.

My thinking at EOD is that the bearish rising wedge (bear flag) is in-play and a drop is coming in the near-term. Just what size and wave-structure the drop takes will help us sort out which count (primary or alternate) is correct. I have maximum tragets for the coming drop in the range of 1110 to 1133, but at a minimum the drop should go back to the start of rising wedge at 1147.

SP-500 15-min Chart (EOD):

SP-500 Daily Candles (EOD):12:00pm EST:  So far the market is being rejected at the 13-day EMA (yesterday at 1170 and today at 1167) since the bear-cross over of the 34-day EMA on May 6th. This is what happened in late Jan-early Feb before the next big leg down.

SP-500 Daily Candles (11:43am):

11:10am EST:  Triangle to new highs in the 1182/1190 area or Bear Flag (rising wedge) with a drop down to 1105/1110?  Both formations are on the table this morning.

SP-500 15-min Chart (11:00am):

8:05am EST:  ES Futures traded all the way down to 1140 (1143 cash), but held at the all important 1134 (1137 cash) level that keeps the door open for my upside wave extention. At 8:00am this morning the ES Futures are back up to 1158 (1161 cash). The wave-iv or wave (4) triangle is still a possibility if this wave up wants to extend towards the 1182 to 1190 area.

SP-500 ES Future 60-min Chart (7:36am):

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