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June 21st, 2010: Update 4 – EOD

Posted by pugsma on June 21, 2010

4:55pm EST:  Based on the afternoon selling and break of the mid-channel line, I’m going to call 1131 the top of wave (3) for the primary count.  Wave (4) should retrace 38% to about 1100, which is near the bottom channel line.  The inverse head and shoulders neckline sits at 1105, so that is also a valid target.   The dropfrom 1131 to 1108 could have been the end of this wave (4) or just the a-leg of an a-b-c Zig-Zag  for wave (4).   The key will now be to watch how the market reacts to any the next attempt to cross back through the 1120 level.  If it hits the 1120 area and falls back then we are looking for a c-leg back down to test 1100.   As support, the 13-day EMA sits near 1101, and both of the 34-day EMA and 200-day SMA sit at 1111.  After wave (4), I’m still targeting the 1170 area for the completion of this wave (5)-3-[1]-P3 and wave 5-[1]-P3 should reach above 1220.

For both alternate counts wave A-[B]-P2 is complete at 1131.  For both counts, I’m looking for B-[B]-P2 to target the 1100/1105 area.  For the 1st alternate (purple, large 3-3-5 flat) the C-[B]-P2 wave should run to 1220 by August before dropping back down in the fall to test 1040 for the [C]-P2 wave.  For the 2nd alternate count (red, large 5-3-5 ZZ) I’m looking for wave C-[B]-P2 to end at the 1150/1170 area in the middle of July, then the [C]-P2 wave should drop to the 950 area in the fall.  This 2nd alternate count is the most bearish of the three, and it’s even possibe that the 1131 high today was the top of wave C-[B]-P2 for this count.  In which  case we are in for a long and deep 5-wave drop for [C]-P2 from 1131 down to at least 950 (870 maximum).  This 2nd alternate count is for a potential double dip recession scenario.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD:

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