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Sept 23rd, 2010: Update 1 – Pre-Market

Posted by pugsma on September 23, 2010

8:35 am EST:  ES Futures fell to 1121 (1126 cash equiv.).  So we have a breached of the key 1127.26 level in the ES futures. Although this is important, we need verification in the cash market to finally declare that wave v-(1) is over and eliminate the alternate count for a near-term higher high above 1148.58.

For the moment we’ll assume we’ll get that confirmation in the cash market this morning.  The count is my primary count that 1148.58 is the top of wave (1) and we started correcting in wave (2) on Tuesday afternoon after the FOMC meeting.  Remember at 3:05 pm EST on Tuesday, my afternoon post declared the wave v-(1) top was in at 1148.58 as my primary count.  So the drop to 1131.58 yesterday was a wave a-(2) correction of 17 points.   The subsequent weak bounce to 1137 was the wave b-(2).  Remember I mentioned at the time that if this weak bounce does not get above the key 1137 pivot and close above it, then the risk is to the down-side.  Thus, my primary count remained that we were in a wave (2) down, even though the 1127.36 level was held yesterday.  We have a couple of targets for wave c-(2).  The first would be where c=a at 1120.  And the second, my preferred, is where c=1.62a at 1108.  The 38% retrace level is at 1107 and 1107 is a key pivot support.  There are open gaps that need closed at 1125, 1113, 1110, 1099, and 1090.  There is also a 50% retrace at 1094 and another key pivot at 1090.  Remember a wave c-(2) should unfold in 5-waves down.

Some people seemed confused yesterday that I was standing by my primary count that the peak of wave v-(1) was in.  But just remember to keep things simple.  When a key support is broke (i.e. the 1137 pivot) and becomes resistance, that is an important event.  And the primary count must always respect this.  It’s pure technical in nature and I’m trying to keep the primary count on the side of highest probability.  I’m seeing a few of subscribers lately getting emotional with their comments and making “declarations” like “up we go to 1170” or “down we go 950”.   Please be careful making such statements, as it may confuse other subscribers.  I’m trying to keep this blog technical in nature.  If you have a valid reason for your declaration comment then share it with us or post a chart to back it up.  Thanks.

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=1e9c18e1-c22a-48f0-b199-744d04b8b222

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=69f6e6fa-4c32-4520-aecc-d9f63b754de3

ES Futures (7:46 am):

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