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Aug 3rd, 2010: Update 3 – EOD

Posted by pugsma on August 3, 2010

6:20 pm EST:  A few people are worried about the negative divergence that developed today between price and the McClellan Oscillator.  It is a first warning sign, but the McClellan oscillator can start to have negative divergence well be the the price peaks (just look at the recent Feb to Apr bull run for example).  We’ll need to see the daily RSI and MCAD roll over and start to negatively diverge for confirmation of a nearing top.

SP-500 Daily Candles with McClellan Osc (EOD):

5:50 pm EST:  A very boring day, as is typicall of a wave 4.  I think we could still only be in wave 1-(3) and it looks like today was consolodation symmetric triangle for wave iv-1-(3).  The e-leg of the wave iv triangle may have had a bit of under-throw below the lower triangle line in attempt to throw everyone off going into tomorrow.  E-legs often have under or over-throw on a fake-out move.  The consolidation took place above the 200-day SMA of 1114, which is bullish.  The triangle target for wave-v is between 1133 and 1138 depending on the measurement rule used (i.e. apex tip or top).  Ultimately for wave (3)-3-[1], I’m looking for a target between 1152 and 1192 (i.e. 1171 mid-piont).

The alternate count of the leading diagonal wave 1-[1] (i.e. bearish rising wedge) remains unchanged.  We need to watch for a drop below 1114 and then below 1106 to confirm that this count is in play.  The targets for this count in the 1055 to 1082 range.

SP-500 15-min chart (EOD):

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