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Aug 9th, 2010: Update 2 – EOD

Posted by pugsma on August 9, 2010

9:20 pm EST:  OK, back home in Chicago after a weekend n St. Louis.  Not too much exciting happened with the SP-500 day.  The SP-500 did manage to make a slightly new higher recovery high of 1129.24 vs. 1128.75.

The primary count is that wave 3-(3)-3-[1]-P3 is underway off the 1107 low on Friday.  This count really needs to get cracking the next few days and break the upper boundary on the bearish rising wedge pattern.  It needs to break through the 1131 resistance, then break the 1138 level to confirm.  The target for wave 3-(3) is about 1150 and wave wave 5-(3) it’s a target near 1170.  The 1170 area should be acheived some time during OPEX week, next week.

The alternate count is that the SP-500 is  in wave v-(5)-1-[1]-P3.  Thus, for the alternate count this whole move from 1011 to 1129 is just wave 1-[1]-P3 for a leading diagonal (bearish rising wedge).  So I’m looking for a completing of this wave 1-[1] around 1138 and then a big fall for wave 2-[1] back down 62% to 78% to the 1036 to 1055 area.  Leading diagonals like to retrace very deep.  This count fits well with the triple negative divergence on the 60-min MACD (see chart below) that may turn in a quadruple negative divergence with a peak to 1138 followed by a hard fall.  This count would get the bears really excited as they’d think minor 3 of P3 down had begun and it would suck in a lot of shorts that would be used for the big squeeze in wave 3-[1]-P3 reversal headed back up.  I really like this count, and if the 1138 area can not be taken out decisively in the few two days, it will become the primary count.

The FOMC meeting announcement on Wed Tues afternoon should provide the catalyst for one of the two counts listed to play out. 

SP-500 15-min Chart (EOD):

SP-500 60-min Chart (EOD):

SP-500 60-min Chart with MACD (EOD):

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