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Aug 24th, 2010: Update 5 – EOD

Posted by pugsma on August 24, 2010

5:30 pm EST:  Primary count is wave v-(c)-2-[1]-P3 in progress.  I have the drop to 1046.68 today labeled as wave 3-v-(c), the rise today to 1060 labled wave a-4-v-(c) and the drop to 1051 as b-4-v-(c).  I’m looking for  potential rise up to the 1065 gap to complete wave c-4-v-(c), if c=a.  I’m expecting wave v-(c)-2-[1]-P3 to complete near 1140, if (c)=(a).   Recall that I have wave 1-[1]-P3 labled as a leading diagonal.  Thus, as I have said many times, if that count is correct,then wave 2-[1]-P3 should retrace between 62% (1056) and 78% (1037).  So my primary count is still on target as labeled.  This count also agrees with the large inverse head and shoulders with neckline at 1131 and right shoulder forming here between 1040 and 1060.  Wave 3-[1]-P3 up should begin once this right shoulder is formed.   I have the wave [1]-P3 target at 1220 to 1250 by the end of 2010.  Wave [1]-P3 is just the beginning of a new 5-wave multi-year secular bull market leg higher.

The first alternate (shown in blue on the daily chart), is that we are in minor degree wave C-[B] of Primary Wave D (PD) of a large expanding trianlge for cycle degree wave IV.   The target area for this C-[B] leg is around 1040.   I’m expecting this major degree [B] wave to play out as a large contracting triangle with wave D-[B] up to 1105 and E-[B] down to 1070 yet to come in Sept and Oct.   Then the major degree [C]-PD wave up should begin in October.  Wave 1-[C]-PD should be headed towards 1220 by the end of 2010.  We should have 5 waves up to complete [C]-PD sometime in late 2012 with a target between 1350 ([C]=0.62A) and 1565 ([C]=[A]).  This would end a cyclical bull market run from March of 2009.  The next leg down of primary degree E (PE) would return to near the March 2009 lows of 666 by 2015 to complete cycle degree wave IV.

The 2nd alternate (shown in red)  is  that we are in wave v-(1)-3-[C]-P2 down.  This wave v-(1)-3 should end around the same 1040 target area, before a wave (2)-3 bounce to about 1067 to 1077.  Wave (3)-3-[C] down should target 1011 and (5)-3-[C] should end near the 985 area.  Ulimately wave 5-[C]-P2 is targeted at 950 or the 50% retrace of P1.  And worse case if the large head and shoulders plays out the 62% retrace of P1 is 870.  I have the P2 target of 950 by mid-Oct and 870 by the end of 2010 if the P2 correction goes on that long.

So right now which count is preferred?   Even though I have said a break of 1057 changes my primary count to the 2nd alternate (shown in red), I’m not going to change from my primary count just yet.  The primary count has played out precisely as a leading diagonal in minor degree wave postion 1 should.  We are almost at the 78% retrace target of 1037.  So unitl 1037 is breached I will remain with this primary count.  And theoretically the only way to completely bust the primary count is to break 1011.   So I may stick with it even below 1037 if the right indicators are present.  Notice it takes 3 drives (i.e. minor degree waves 1-[C], 3-[C], and 5-[C]) lower from the 1129 to confirm the 2nd alternate count.  And so far we are only on teh 2nd drive and 2nd drive (i.e wave 3-[C]) has been less steep (look at the yellow channesl on the 15-min chart) than the 1st drive (i.e wave 1-[C]). 

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

SP-500 Daily chart (EOD):

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