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June 6th, 2010: Next 5 to 9 Months

Posted by pugsma on June 6, 2010

7:48pm EST:  There are still several valid options for how P2 of the bull market will play out.   P1 lasted 14 months.  Theoreticaly P2 should last between 5 (38% time) to 9 months (62% time) and correct between 38% and 62% of the P1 price increase.   However, my primary count is that P2 has ended in only 1 month at the 1041 low.  I don’t have 100% confidence in this count, so I’m going keep a 1st and a 2nd alternate counts on the table, explained below:

  • Primary Count:  P2 ended after 1 month at the 1041 low (32% retrace of P1).
  • 1st Alertnate Count:  1041 was the 3-wave [A] leg of a 3-3-5 flat for P2.  The 3-wave [B] leg should rise back up to near 1220 by August.  Then the 5-wave [C] leg should end around 1010 (38% retrace of P1) in October after a 5 month correction.
  • 2nd Alternate Count:  The SP-500 is still in the [A] leg of a 5-3-5 Zig-Zag.  This 5-wave [A] leg is playing out as a leading diagonal triangle that will complete around 1010.   Leading diagonals often appear in he A-leg of a 5-3-5 ZZ.   There will then be a 78% bounce for the 3-wave [B] back to about 1174 by August.  And finally a 5-wave [C] leg down to 943 (50% retrace of P1) in October after 5 months.   This would be a [C]=[A] extension.   It’s also possible that a [C]=1.62[A] extension could lead to a deeper retrace of 62% near 876 after 7 to 9 months.

If the May 25th low of 1041 is taken out, then the primary and 1st alternate counts will have been elminated and the 2nd alternate count will be left.  Obviously the 2nd alternate is the most bearish of the 3 counts.   So we are at  a critical juncture this week.  Lets  see what happens.

SP-500 60-min Chart (EOD 6-4-10):

SP-500 Daily Chart (EOD 6-4-10):

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