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Sept 2nd, 2010: Update 5 – EOD

Posted by pugsma on September 2, 2010

5:25 pm EST:  Today played out much as I expected, but we did close above my 1086 target for wave iii-(1) at 1090.  It looks like we had a small ending diagonal (ED) with some overshoot for wave 5 of iii-(1).  An ending diagonal will typically retrace back to where it started and it this case that is 1076.  I have the wave iv-(1) fib retrace targets of 1079 (23%), 1071 (38%) and 1065 (50%).   As discussed 23% or 38% is the most typical for a wave 4.  So let’s split the difference and go with the 1076 target (i.e the starting point of the ED).  We have to watch carefully for a break below 1061 that would signal that the current larger wave up over (i.e. wave-iv into wave-i violation).  A really horrific Friday Jobs Report could be a catalyst for break-down below 1061.

After the retrace for iv-(1), fully expect wave v-(1) to reach the 1100 to 1105 area some time next week.  This should coincide with the downward sloping bear trendline (in purple) off the April high of 1220 that will be in the 1110 to 1105 next week.  Any break above this trendline would have big time bullish implications for an intermediate term trend change.

Is it possible that we “gap and go” tomorrow on a great Friday Jobs Report?  Sure it is.  And we could reach the 1100 to 1105 area in that case which would extend this wave iii-(1) higher.  The waves structure currently doesn’t “speak” this scenario to me.   But as I cautioned in the comments section last night; when you are in a wave 3 up it is dangerous to short it and fight the trend in case the wave 3 sub-divides and pushes higher.

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

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