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July 21st, 2010: Update 6 – EOD

Posted by pugsma on July 21, 2010

6:25 pm EST:  Since Mike F. asked the question about an scenario for a move below 1040 and then below 1011, I have shown what I will call my alternate 2 count (in red) on the 60-min chart.  This count is a low probability (under 20% right now).  If 1057 is breached it’s probability increases to about 30% and if 1040 is breached it would like become the primary count.   This count assumes the price action since the May low of 1041 has been part of a running flat and wave [B]-P2 of the flat just completed at 1099.  I would expect a  100+ point drop to the 988 area for [C]-P2 in this count.    There is support around 978 from the August 2009 low.  In this count, wave (1) 1057 and wave (2) 1089 would be in the books as of today and we are in a wave (3) down to a target of 1021 for (3) =1.62(1).  Just by showing this alternate 2 count, it probably prevent it from happening.  Kind of like carrying an umbrella around on a sunny day.  🙂

SP-500 60-min Chart (EOD):


5:15 pm EST:  SP-500 closed just above the 20-day SMA of 1066, and held the lower support trend line of the upward channel.  For the primary count, I have labled the move down from 1089 as wave (2)-3-[1]-P3.  However, with the threat that this count goes invalid with a breach of 1057, an altenate count is in order (see purple labels).  It’s possible that the wave 2-[1]-P3 is still unfolding as a larger 5-3-5 Zig-Zag.  The wave (a) low would have been 1061, followed by a wave (b) expanded flat to today’s 1089 high.  Now we have entered the (c) leg down of the ZZ that should target the 1050 area if (c)=(a).  The 62% retrace of of the wave 1-[2]-P3 move from 1011 to 1099 is at the 1044 level.  Both counts are about equally likely, although I still favor the primary count.  The primary count, has to get through the 50-day SMA (1087 today) very soon in order to be confirmed.

The market is definite locked in battle to determine the intermediate trend, as I indicated on the daily candle chart this morning.  The downward channel line has been rejected several times and continues to give the bears as place to force a retreat in prices.   Things are slightly back in the bears favor with this afternoon’s price action.  But if the bulls can hold 1057 tomorrow, then they’ll likely make another attempt at changing the trend by punching through the 50-day SMA.   Copper futures continued strong, even into the today’s afternoon sell-off.  And the VIX is still not showing much fear of lower stock prices.

SP-500 15-min chart (EOD):

SP-500 Daily Candles (EOD):

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