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Aug 17th, 2010: Update 5 – EOD

Posted by pugsma on August 17, 2010

5:35 pm EST:  The sell-off at the end of the day hurt the bull case considerably, as it happened right at the key 1099 level that we talked about in the mid-day updates.   The positive is that the SP-500 regained the 200-day SMA above 1088.  The negative is that the 13-day EMA at 1098 formed resistance to today’s strong advance.  And the 13-day EMA is now only within 1 point of crossing back under the 34-day EMA at 1097.  This would be bear cross and would strengthen the case for the alternate count. 

Do you remember the bear cross of the 13 vs 34-day EMA on 7/7/09 was a “fake-out” and another bull cross came quickly on 7/16/09 that signaled the strong advance from 869 to 1220.  It now looks like the 7/26/10 bull cross of the 13 vs 34-day EMA may have been a “fake-out” and the bear cross that could happend as early as tomorrow 8/18/10 could signal a precipitous decline to 950 or even 870.  This bares watching closely (see the daily 13 vs 34-day EMA chart for reference).

The primary count is that wave iii-(1)-3-[a]-P3 completed today at 1100 and wave iv-(1)-3-[1]-P3 is under way.  I’m expecting this wave iv to hold above 1087 and maybe form a complex corrective pattern and then I’m looking for one more push up to about 1105 for wave v-(1)-3 if this primary count is correct.  And the subsequent pull-back for wave (2)-3 should hold above the 1079 to 1081 gap formed today, before wave 3-(3) up gets underway.

The alternate count is that wave c-2-[C]-P2 completed today at 1100.  And now wave i-3-[C]-P2 down is underway.   The sell-off from here should begin to accellerate if this count is correct.  The gap at 1079 to 1081 should be quickly closed as the move down gains momentum.   You did not want to be long when this hits it’s wave iii-3-[C] peak velocity.  The 15-min chart is showing a bear cross on the MACD at the end of today.

Again, I have to remain neutral with these two counts between SP-500 1057 and 1105.  The primary is only slightly favored, as it’s been my count from the July 1st low and we are in the upper end of the 1057 to 1105 range.

SP-500 15-min Chart (EOD):

SP-500 15-min Chart with MACD (EOD):

SP-500 60-min Chart (EOD):

SP-500 Daily 13 vs 34-day EMA Chart (EOD):

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