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May 27th, 2010: The Futures and THE FUTURE

Posted by pugsma on May 27, 2010

7:30pm EST:  Nothing has changed with my counts since my earlier day updates. Primary count is looking very strong. I still think we in wave i-(3)-1-[1]-P3 of the primary count. I think this wave i-(3) has ended here EOD right at the 200-day SMA of 1104. The is also gap resistance between 1105 and 1119. I’m looking for wave ii-(3) pull-back to at least the broken neckline at 1090 (38% retrace) tomorrow. I think we will start wave iii-(3) before the holiday weekend and that this iii-(3) wave should get us through the heavy 1105 to 1119 resistance next week. The 1st alternate count (purple) is that this is wave i-a-[B]-P2 up, which aligns with the primary count until we reach the 1150 to 1220 level, then it breaks back down in the [C]-P2 leg. And the red 2nd alternate count (red) that this is a wave (4)-[C]-P2 is hanging by a tread, as 1108 is the 62% retrace. There will not be near term new lows below 1041, if the 1115 level is breached.

SP-500 15-min Chart (EOD):

10:20am:  The SP-500 went up and touched the 1090 neckline near the open and has since backed off. For the primary count we are likely in a wave i-(3)-1-[1]-P3. The first alternate (purple) is wave i-a-[B]-P3. It should be noted the 1st altnerate count is headed in the same general direction as the primary, except when it reaches the 1150 to 1220 area, it will head back down in wave [C]-P2. I have not removed the red alternate count that this is still part of wave c-(4)-[C]-P2 and will get a wave (5)-[C]-P2 to new lows under 1040. This wave (4) could climb to 1095, 50% retrace of wave (4), and fake-out the bulls with a neckline break before crashing back down. As always the counts are listed in my order of highest probability first, and the primary and 1st alernate counts are both bullish for the intermediate term.  The 2nd alternate is near term bearish still, but will turn intermediate term bullish after one last drop.

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

8:45am:  Futures peaked at 1092 (1095 cash), so they did break the 1087(1090) neckline of the inverse head and shoulders. Let’s see if there is follow-through and confirmation in the cash market above 1090. Target for (3) is 1140. An close above 1074 today is confirmation of the hammer candle from Tuesday.

SP-500 ES Futures 60-min Chart (8:26am):


12:30am:  See the attached weekly chart for my primary count forecast through 2012. I believe we are forming a 2nd powerful inverse head and shoulders with a neckline between 1200 and 1100. Once P2 completes either now or in the fall, then P3 will break this neckline which will propel the markets past the Oct 2007 high of 1575. You can clearly see this same inverse head and shoulders pattern on all major US Indices (i.e. DOW-30, Nasdaq, and Russel-2000). The 1st power inverse head and shoulders break-out occured in July 2009 when the SP-500 broke above the 950 neckline and propelled it to the 1220 by Apil 2010.

This is my technical view of the SP-500. However, I’m flexible and will adust my counts and views accordingly as the waves develop over minutes, hours, days, weeks, months and years. I showed a couple alternate views on the future over the weekend one being the expanding triangle playing out over the next decade and the other being a falling wedge droping down to about 400 by 2012. We are certainly at a critical junction for my primary count. As we move through the balance of 2010, it should become more clear which view is correct.

SP-500 Weekly Chart Projection Thruough 2012:

12:17am:  ES Futures dropped to 1056 (1059 cash) and have since rebouned to 1068 (1071). This 1059 cash market level is the 62% retrace and is a down channel back-test on the futures chart. The primary count is looking pretty good as long as the overnight Futures hold above 1056. And the ultimate key to this primary count is a break-out above the 1090 neckline.

SP-500 ES Future 60-min Chart (12:00am):

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