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May 26th, 2010: Watching for Follow-Through

Posted by pugsma on May 26, 2010

5:30pm EST: Well today my 1090 target for wave (1)-1-[1]-P3 was hit just about on the button. The primary count is that we are tracing out a wave (2)-1-[1]-P1 with a target of 1065 (50%) to 1059 (62%). The close was at 1068 and ES Futures are already down 5 points to 1060 (1063 cash). So there is not much room to fall overnight if this count is going to hold up. This primary count sports an inverse head and shoulders with a target to 1140, after the right should completes at the 1060 area. This count needs a breakout over the 1090 neckline to confirm.

The alternate count (shown in red) is that the retrace to 1090 was wave (4)-[C]-P2 and wave (5)-[C]-P2 is just getting underway at the end of day. The count would be wave iii-(5)-[C]-P2. This count has a target of 1032 for wave (5)=(1), target of 1021 for [C]=[A] or target of 1010 for 38% retrace of P1.

Obviously, what happens overnight in Asia and Europe is going to hold the key. If things go bad overseas, we could wake-up to a fresh new low tomorrow. It’s an important next couple of days as the bulls and bear battle to control the area near 1050.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

11:05am EST:  I think wave (1) maybe over just above my 1090 target, as we hit 1090.75. Now the primary count has a wave (2) retrace target between 1059 (62%) and 1071 (38%). This count has the inverse head and shoulders formation going for it and the fact that the down channel trendline was broken.

Also, I left the alternate count in red on the chart. I found a way for this current wave to continue below 1041, assuming yesterday was only the completion of wave (3)-[C]-P2 and today’s run to 1091 was wave (4)-[C]-P2. We would then get a big drop down going into the end of this week for wave (5)-[C]-P2 towards the 1032 target for wave (5)=(1). One thing that this count has going in its favor is that the wave (4) would have retraced back to previous wave-iv of (3) 1090 level. This very typical for a wave 4 of a larger degree.  Wave (4) retrace tagerts are 1082 (38%), 1095 (50%) and 1108 (62%).  We have already crossed the 38% retrace.

Both counts point down in the near term, it’s just a matter of whether or not the 1060 area will hold support and therefore the primary count will be proven correct which leads us to higher levels in the intermediate term.  A break down below 1060 and the red altrenate count points to new lows below 1041 and the trend remains down for a while longer.

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

8:52am EST:  ES Futures are trading up to 1085 (1088) this moring. There was a sucessful back-lest of the down trendline overnight.  My target for wave (1) up was 1090, which is the the inverse head and shoulders neckline. If this 1090 area holds as resistance, we could see a 50/62% retrace to the 1060 to 1065 area to form the right shoulder for wave (2) down. If we push through the 1090 neckline with the retrace, then the next target area is 1100/05 and then 1115.

SP-500 ES Futures (8:27am):

11:35pm EST (5-25-10):  Looking for follow-through and/or consolidation of todays reversal.  ES Futures traded up to 1083 (1086 cash equiv) and have since pulled back to 1072 (1075 cash). This looks like a back-test of the down trend channel line that was gapped up and over during the after-hours trading today. The key levels to watch in early morning cash market trading are 1078 and 1090 to the upside and 1060 to the downside.

SP-500 ES Futures 60-min Chart (10:53pm):

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

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