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Aug 24th, 2010: Update 1 – Pre-Market

Posted by pugsma on August 24, 2010

8:30 am EST:  ES Futures have dropped to 1051.50 (1054.50 cash).   The critical ES 1053 (1056) level has been broken.  This opens the door for a test of ES 1037 (1040).  Also, note that Copper has set a new low below Monday’s low, whiping out the postive divergence with the SP-500.  The 30-year bond is approaching the all-time price high level it hit in Dec 2008 during the height of the panic market crash intial low. 

6:30 am EST:   ES Futures have dipped to 1055 (1058 cash) overnight.  As I suspected based on the close yesterday, wave v-(c) was headed below Friday’s low of ES 1061 (1064).  For the primary count, the 62% retrace for wave 1-[1]-P3 is at ES 1053 (1056).  There is also a previous swing low at ES 1054 (1057).   Therefore holding this target area around ES 1053 (1056) is a key today.   The next support under this is ES 1037 (1040 cash) or the 78% retrace area. 

So far the sell-off since the August 9th high of  ES 1026 (1029) has been controlled and orderlyunfolding in nearly perfect wave formations.   As noted the VIX has remained supressed and within it’s falling wedge during this sell-off.   However, a break of ES 1053 (1056) today could change this.  Remember that the alternate count has the SP-500 in wave 3-[C]-P2 down with wave 2-[C]-P2 having end at ES 1097 (1100).  The target for 3-[C] is 985, with a break of the head and shoulders neckline at ES 1053 (1056).   Therefore below this level I’m going to switch my emphassis to this alternate count as the new primary.  I have been saying for a couple weeks that I’m neutral between the two counts between the levels of 1057 and 1105.  Well, a break of 1057 would cause me to flip the primary and alternate counts, as the higher probabily would favor the alternate.   The existing primary count still hold up at ES 1037 (1040) and the SP-500 moves agressively higher from there, but the probalities say I should switch the counts below 1057.

SP-500 15-min chart real-time link:  http://www.freestockcharts.com?emailChartID=3102be9d-de81-4f9a-92d9-203025dcff9e

ES Futures (5:48 am):

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