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Sept 16th, 2010: Update 4 – EOD

Posted by pugsma on September 16, 2010

11:30 pm EST: Looking at the Sept ES Futures that have already hit 1132 (1132 cash), I can count fives waves up off of the 1119 low today.  Also, looking closely at the 5-min chart again, it sure looks like this entire corrective mess since the Monday Sept 13th, high of 1123.87 counts best as an ascending triangle for wave 4 of v-(1).   I mentioned this ascending triangle possibility on Tuesday, but gave up on it after the drop to 1114.63 on Wednesday.   The ascending triangle measures 13 points in height.  So there are two possible measurement targets.  The minimum target is the e-wave low of 1119 +13 = 1132.  The maximum target is the top of the triangle at 1127 + 13 = 1140.   Both of these targets are in play for tomorrow IF the ES futures hold up overnight into the cash market open.  It’s very possible the SP-500 could hit the 1132 minimum target at the open and then begin the wave a of (2) correction tomorrow and reach the 1107 target by the end of the day.  It’s OPEX and stranger things have happened.  If stays in the 1132 to 1140 area all day tomorrow, then the beginning of the correction for wave (2) will have to wait until next week and it opens the door for even more upside potential before the wave (2) correction.

SP-500 5-min chart (EOD revised):

5:25 pm EST:  The McClellan Oscillator took another big drop today to close at down -16 at +22.  The McClellan stood at +60 on Monday, Sept 13th.  So if we get even a slight increase in the McClellan tomorrow with a new SP-500 high above 1127.37  it will set-up a big negative divergence that will only further confirm a near term top has been put in.  And once the McClellan falls below zero, it’s full sell mode on the SP-500.

5:05 pm EST:  Another boring day with the SP-500 hanging around break-even all day.  The SP-500 has now put in 3 successive slightly lower highs (i.e. 1126.57, 1125.46, and 1125.44) since the 1127.37 high on Tuesday, Sept 14th.  This is typical of a slow topping process, much like the slow bottoming process of the late August time period were successive higher lows were put in over the course of a week.  Also, as I mentioned today, the AAII Sentiment Survey hit a bullish extreme of over 50% bulls.  This will very likely lead to a  near-term market decline, but it does not have to be immediate (i.e today or tomorrow).  The good earnings news out of Oracle and RIMM has popped the Sept ES Futures up to 1129.5 after hours (new recovery high).  So it possible a higher high above 1127.36 will be put in tomorrow.  But a lot can and often does change overnight.

In any case whether or not a slightly higher is high is made tomorrow, I’m looking for a wave (2) retrace back down to the 20-day SMA near the 1085  to 1095 area for a 50% retrace of wave (1) going into late next week and the end of September .  After the wave (2) low, I’m expecting the Q3 earnings news to drive a wave (3)-3-[1]-P3 wave up towards the 1170 to 1200 area going into the mid to late October (see the 60-min chart).

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

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