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May 19th, 2010:

Posted by pugsma on May 19, 2010

4:20pm EST:  OK, I have made couple decisions this afternoon. First the 1100 area (200-day SMA) is going to be my line in the sand for abandoning the bullish near term alternate count. If the SP-500 closes under this area, I don’t think it’s reasonable to maintain the bullish near term count. Second, this drop from 1174 to 1100 looks like a bullish falling wedge. So I’m going to label this entire move down as (1)-[C]-P2. A bullish falling wedge should retrace roughly back up to where it started or about 1149. Targets for (2)-[C]-P2 are 1127 (38%), 1135 (50%) and 1145 (62%). So the 62% retrace fits wtih the falling wedge. I don’t think (3)-[C]-P2 down can get going until the over-sold near-term indicators can rebound higher. So we need a good bounce higher from here going into OPEX Friday and early next week.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

12:20pm EST:  The SP-500 traded down to 1100.66. The 200-day SMA sits at 1102, which is why it has found some support. The 200-day SMA has held as support on a closing basis since the golden cross (200-day above 50-day SMA) in mid-June 2009. A close above 1102 today is key for the bull case (alternate count).  We are at another critical juncture, with intermediate term to even longer term implications.

SP-500 Daily Candles Chart (11:42am):

11:00am EST:  So far so good with the primary count being right on target for the end of wave i-(3)-[C]-P2 at 1105.  Looking for a bounce to the 1127 (50% retrace) to 1133 (62% retrace) area for wave ii-(3) before iii-(3) down really gets going.  The alternate count for wave 2-[1]-P3 ending at 1105 also looks attractive too because 1107 was the 62% retrace of the wave 1-[1]-P3  run from 1067 to 1174.   The 1105/1107 area is key long term pivot to hold for the bullish alternate count.  So as we get this next bounce up, we have to watch the for corrrective (primary count) vs impulsive (altrenate count) characteristics.

SP-500 15-min Chart (10:45am):

8:50pm EST:  ES Futures traded all the way down to 1105 (1107 cash), which closed the big gap up from a week ago Monday. This is the area I’m looking at for wave i-(3)-[C]-P2 of the primary count or wave 2-[1]-P3 of the alernate count to end. 1107 cash is 62% retrace of the move from the 1067 low to the 1174 high. I’m looking for a bounce up to the 1125 to 1130 area for ii-(3) of the primary count.

SP-500 ES Futures 60-min Chart (8:30am):

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