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June 24th, 2010: Update 5 – EOD

Posted by pugsma on June 24, 2010

5:20pm EST:   Nothing new has changed since my intra-day mid-day update, except 1072 (not 1075) looks like it is the low of this wave.  So here is what I stated earlier in my premium post and below are the updated charts.

“I’m completely removing my primary count.  I don’t believe the 3-3-5 flat scenario for P2 has much of a chance with the price action the past week.  In other words I don’t see a test of the 1220 high coming before a new low below 1040.78. 

I think the evidence is mounting the the aggressive move down from the April 1220 high  to  May 1041 low was a 5-wave move, which I will label [A]-P2.  The corrective move from 1041 to 1131 was an A-B-C Zig-Zig for [B]-P2.  The retrace for the [B] was precisely 50%, which fits with a B-wave correction.  And now we have begun a 5-wave [C]-P2 move lower that should target the 952 area if [C]=[A], which it usually does.  I believe the move down off of 1131 counts best as a 5-wave impulse for wave 1-[C] and is at or near completion in the 1072 area.  It’s possible that it is a leading diagonal for wave 1.  I’m looking for wave 2-[C]  bounce to target 50% (1102) to 62%(1109) retracement before all heck breaks loose in wave 3-[C].  Wave 3-[C] should  bust through the 1040 support and bring in a lot more sellers.  I’m looking for the back-test of the 1103 to 1110 area over the next few days to a week as the Q2 ends and earnings news starts to come out.

The 1st and only alternate count remains unchanged.  It’s that the 1042 low in early June was a truncated 5th wave of a large leading diagonal (LD) for wave [A]-P2.  In this LD scenario, wave [B]-P2 should retrace to between 62% (1152) and 785 (1180) of wave [A].   The rise to 1131 would be A-[B], the drop to 1072 would be B-[B] and now we would be looking for rise up to 1152 to 1180 over the next few weeks.  This is possible with good Q2 earnings news.  But the SP-500 is going to need to break back above the 200-day SMA at 1111 very soon to prevent the primary count from playing out.  Even though this count recovers to the 1152/1180 area, it still ends up making a new low below 1041 in the late summer or early fall (Sept/Oct).  I have an intial target for this 1st alternate count as 1000 where wave [C]=[A] after hitting the 1180 level for wave [B].  Also, not that 1010 is the 38% retracement of P1.

The key now to determining the correct count between the two present above, will be to watch how the SP-500 reacts at the 1100 to 1110 area on the next bounce higher.  If it can’t break through 1110 or if it can’t even bounce past the 38% retracement of 1094, then the primary count is likely playing out.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

SP-500 Daily Chart (EOD):

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