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May 14th, 2010: Watching the 1150 Area

Posted by pugsma on May 14, 2010

5:00pm EST:  To me this wave down looks like an impulse, which is what you’d expect for wave (1)-[C]-P2 of the primary count. This whole [C]-P2 leg should be one big impulse where every rip is sold and dip buyers get crushed. Remember my first [C]-P2 target is 1010 (38% retrace of P1 666 to 1220), but any level under 1067 will satisfy the E-wave count. I think there is still one more wave down, wave-v-(1), yet to come early Monday. Since we have traded down to 1126, the next two logical points for this wave (1)-[C]-P2 to end are at 50% retrace (1120) or 62% retrace (1107). The large gap up from Monday is between 1110 and 1121, so that fits here too. The bounce up from this level for wave (2)-[C]-P2 should happen during the early part of OPEX week, next week. I’m looking for the bounce to the 1150 area. If it gets past 1150, then the alternate for wave 3-[1]-P3 starts to gain momentum. We’ll just have to wait and see what the bounce looks like before confirming the count.  Have a nice weekend.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

11:10am EST:   Market is acting similar to the Jan-Feb correction after a re-test of the 13-day and 34-day EMA at 1173.   The price has now hit the 38% fib retrace at 1133.  The 62% fib at 1107 and the 200-day SMA at 1100 are the last line of defense for the bulls.   If that area is breached [C]-P2 is definitely underway.

SP-500 Daily Candle Chart (10:47am):

10:10am EST:  The 1148 (23%) fib retrace did not hold up and the SP-500 has dropped down to 1135.18.  The next fib retrace is 1133 (38%) and after that 1120 (50%).  This 1120 to 1133 area is where I have had the wave (1)-[C]-P2 for the primary count or the wave 2-[1]-P3 of the alternate count postitioned since Tuesday of this week.   The key now is to decifer which count is correct.  The primary count means new lows below 1067 for the completion of [C]-P2 and the alternate counts means new highs above 1220 are coming as wave 3-[1]-P3 gets underway.  The nature of the bounce from this 1120 to 1133 area will help us sort this out.  If we start to get an impulsive move back up, the alternate count is the most likely.  If the bounce looks corrective, then the primary is most likely.

SP-500 15-min (9:50am):

7:45am EST:  ES Futures have traded down to 1145.7 (1148.7 cash) this morning. So we have hit the 1147/1150 target and support that I spoke of in last nights EOD update. I would expect a bounce from this area. The nature of the bounce will determine if there is more upside above 1173 yet to come or there is more down-side to follow. If the 1150 area holds as support there is a new parallel channel that could take the SP-500 to new highs, as shown on the ES Futures chart.  Finally, a break through the 1137 line would be very bearish.

SP-500 ES Future 60-min Chart (EOD):

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