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July 19th, 2010: Update 4 – EOD

Posted by pugsma on July 19, 2010

5:25 pm EST:  Another very interesting chart to go along with the VIX chart showing bullish divergences posted in the update 3 today, is this chart is courtsey of StockTiming.com. This chart shows the positive divergence between their zero-based RSI (Relative Strength Oscillator) and the SP-500 price action for the past 2 year.  Every time the RSI positive divergence built up, a rally followed.  As we continue with the overlapping corrective waves of the P2 Bull flag, the RSI positive divergence continues to build up.  I doubt the SP-500 will make a new low below 1010.19, but if we do it will just strengthen the rally that will occur afterwards.

4:50 pm EST: The SP-500 failed to recapture the 13-day EMA at 1074, which is short term bearish.  I’ve been calling for a wave iv-(c) all of today and I’m sticking to that call.  It looks like we have an expanded flat for wave-iv off the Friday low of 1063.  The c=1.62a piont was at 1075.5.  We hit 1074.70, so close enough for me.  Also I always find it interesting when a wave-iv into wave-i overlap comes oh so close and misses.  If you count wave-i as Friday’s first low of 1074.71, then today’s wave-iv high as 1074.70, you can see just how good the computers are that trade by E-wave algorithms.  🙂     Also, as a rule of thumb once a fib level (like 1065 or 38%) is broken, it’s a good bet that the next fib level ( in this case 1055 or 50%) will be tested.  So I’m looking for wave 2-[1] to test 1055 tomorrow.   And if 1055 fails, then a test of 1044 (62% retrace) is possible.

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

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