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Aug 2nd, 2010: Update 3 – EOD

Posted by pugsma on August 2, 2010

11:55 pm EST:  Dr Copper has now rebounded to the Jan 2010 high near 3.40 when the SP-500 was trading at 1150.  So Dr Copper is once again leading the way on the turn in the equity markets.  Notice Copper hit bottom in early June a full month before the SP-500 bottomed.  Dr Copper has been consistantly leading all major SP-500 turns since before the March 2009 bottom.

Copper Futures 60-min (11:35 pm):

6:10 pm EST:  Daily SP-500 Candle Chart still looking very healthy with 13-day EAM vs 34-day EMA bull cross in affect the past week.

SP-500 Daily Candle Chart (EOD):

5:30 pm EST:  Well, when the primary count is calling for a iii-(3)-3, as it was EOD Friday, is a good idea to play it with some type of trade.  Today resulted in a 25  piont (2.2%) gain in the SP-500.  Trading the 3’s and C’s and in particular the 3 of 3’s and 3 of C’s, can be very profitable.  However, it’s always a little more risky when it’s over a weekend and news events could change the count.  Edit (6:30 pm EST): It appears at least one subscribers made the trade to the tune of buying 700 SPY calls on Friday with SPY in the low 109.0’s and selling them today with the SPY in the middle 110.0’s.  Subcriber netted just over $65,000 in one day gain !!!  Good show.

The primary count is playing out almost to the “number”, as the SP-500 continues to trade inside the channel shown on the 15-min chart.  The primary count is still within the wave iii-(3)-3-[1]-P3.  And wave iii-(3) should continue to extend and sub-divided as it climbs higher.  I have a target for wave (3) in the 1152 to 1192 range.  There is weak resistance resistance at 1131 and then 1150, that could slow it down some.  And there is strong resistance between 1168 and 1177 that should end this wave (3).   The support is now at the 200-day SMA of 1115 and then at 1100 to 1105.  Below 1100, we have a different count (see alternate).

The alternate count (purple) is that this entire move up from 1011 to 1126 is part of a large leading diagonal (i.e. bearish rising wedge) for wave 1-[1]-P3.  A leading diagonal is distingished by a wedge shaped pattern where wave 4 is allowed to overlap wave 1, was we did with the drop to 1088 on Friday morning.   This leading diagonal pattern is almost complete and after a test of the 1131 area (June high) it should completely collapse downward to near the base of the wedge (1057).  It would be confirmed with the break of the rising lower channel line around the 1100 to 1105 area.  The target for the resulting wave 2-[1] decline out of this pattern would be the 1055 to 1069 area.  This would finish off the right shoulder of the large inverse head and shoulders pattern.  This pattern can be invalidated if the SP-500 can continue to rise and break through the upper yellow line of the rising wedge ( around 1035 tomorrow).

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

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