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July 16th, 2010: Update 3 – EOD

Posted by pugsma on July 16, 2010

 9:45 pm EST:  Added the updated 15-min and 60-min charts.   Holding above 1055 to 1058  (50% retrace area) is key early next week.  Also, there is a potential large inverse head and shoulders (see 60-min chart) setting up on this wave 2-[1] retrace.  Target area is 1220 after crossing 1105 to 1115 neckline area.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

6:55 pm EST: SP-500 has retraced just a shade beyond the 38% target of 1065 to 1063.   As suspected at the close yesterday, it looks today was a 5-wave (c) wave down of a 3-3-5 flat for wave 2-[1].  Leg (a) was 19 points down, so for (c) = 1.62(a) => 1066.   So again just a small overshoot.   Very typical of an OPEX Friday sell-off that have been the normal the past year.

There was a very large non-confirmation of today’s price drop in the VIX.   The VIX was up 3 points or 12% very early, then fell all day to close at it’s low of up 1 point or 4%.   This indicates to me a large unwinding of short term short positions used as protection against longer term longs positions.  The US dollar and junk bonds remained nearly flat today, also not confirming the SP-500 drop.

I think this pull-back will be short lived,  A 38% retrace is a minimum wave 2 retrace.  The non-confirming data says it could be over.  If it stretches the next fib target is 1055 at 50%.

Updated charts will posted late tonight once I return home from my day trip to my Alma Mater.

Sent from my iPhone

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