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Oct 5th, 2010: Update 1 – Pre-market

Posted by pugsma on October 5, 2010

8:25 am EST:  The ES Futures traded up to 1140 (1145 cash equiv.).   An impressive 13 point bounce of the ES 1127 (1132 cash) low from yesterday morning.   I have this 5-wave move up labeled as wave a of (d)-(4).  We should see a 3-wave b of (d)-(4) down to about ES 1132 (1137 cash) that should fill the gap up open today.  And then another 5-wave c of (d)-(4) up to about ES 1145 (1150 cash).   After (d)-(4) completes, we should then expect a small correction for (e)-(4) back down to near the ES 1132 (1137 cash) pivot.  From there we should have a thrust higher out of the contracting triangle in wave (5) that should reach a minimum target of 11171 and maxim target of 1191.

Remember with these contracting triangles, things can get a little unpredictable near the end of the triangle and the (d) and (e) waves could happen quicker than I have it labeled on the chart.  Thus, the break-out to new highs might happen sooner than the Thrus/Fri time-frame as labeled.  This contracting triangle began on Sept 21st, so it’s very long in the tooth and needs to make a decisive move soon.  So watch for a break above resistance at ES 1145 (1150) to confirm a break-out may be underway.

Finally, contracting triangles can sometimes fail and break-down.  So continue to watch the 1137 cash level for the pivot support now that it has been re-gained.  And if the 1137 pivot fails, then watch the 1131 cash level as the large IHS neck-line support and the 1125 to 1132 gap support.   Any break of 1123 invalidates the triangle wave (4) and means that 5-waves up are complete at 1157.  Targets for the alternate count retrace are 1113 (38%), 1099 (50%) and 1085 (62%).

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=2abe38f9-f013-4af9-9721-7f8b3381c97b

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=8967d29e-10ae-4873-a4af-04a18795a9a9

ES Futures (7:43 am):

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