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Aug 23rd, 2010: Update 5 – EOD

Posted by pugsma on August 23, 2010

5:30 pm EST:  There is a remote possibility that the primary count at the minuette degree has labled in today’s updates could still hold up, if 1063.91 is not breached tomorrow for the wave v-(c) low.  However the probability is now low, since we have retraced 82% to 1067 of the wave-i run up from 1064 to 1081.  It’s more likely that Friday’s low of 1064 was wave iii-(c) and today’s run to 1081 was wave iv-(c).  Today’s drop from 1081 looks like the beginning of wave v-(c).   The first target area for 2-[1]-P3 to end is the 62% retrace of wave 1-[1] at 1056.  And a primary count alternate target (in blue) is the 78% retrace of 1037.  Also, 1040 is the wave (c)=(a) target.  Finaly 1040 forms a near perfect left shoulder on the large inverse head and shoulders pattern with neckline at 1131 (green lalels).

With respect the primary count the MACD bull-cross and positive divergence on the 15-min chart from Thurs and Friday played out with the 17 point run form 1064 to 1081 today.  Now today the 15-min chart genearate a MACD bear cross, which agrees with the minuette degree change predicting a wave v-(c) target below 1064.  The 60-min chart MCAD received a bull cross today and sports a growing positive divergence.  This could be setting up for the larger rally that follows the next price low, as the new low will likely further enchance the positive divergence.

The alternate count (in red), has the SP-500 working on minute degree wave (1)-3-[C]-P2 down.  The wave v-(1)-3 of this count should complete in the same 1037 to 1056 target zone discussed above.  Keep in mind this is my most bearish count and it ultimately targets the 950 (50% retrace) or 870 (62% retrace).    The change over to this becoming the primary count occurs on a decsive break below 1037.  And a break below 1057, puts this count on equal footing with the current primary count.

Finally, if you look at the daily chart below that I posted this weekend, notice how the SP-500 continues to slowly correct within the large triangle trendlines.  We could be range bound for some time if the corrections down and rallies up remain weak (i.e. the VIX does not break-out higher).  For this big picture count, we could be about to but in the minor degree C-leg down to 1040 (shown in blue) of the the major degree wave  [B].  The next leg up to about 1100 would be the D-leg of [B].  And then a final E-leg of [B] back to about 1070 in mid-Oct before the major degree wave [C] up begins.  This is my cyclical bull model ([A]-[B]-[C] of Primary D of Cycle Wave IV) versus the secular bull model (i.e. P1-P2-P3-P4-P5 of Cycle Wave V).   Both models predict new highs above 1220 are coming in 2011.

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

SP-500 Daily chart (EOD):

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