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Oct 6th, 2010: Update 1 – Premarket

Posted by pugsma on October 6, 2010

7:30 am EST:  ES Future traded up to 1160 (1165 cash), setting a slightly new high above yesterday’s cash market high of 1163.  However, the ES seems to still be respecting the new lesser upward sloping yellow channel-line shown on yesterday’s 5, 15 and 60-min charts.

The primary count is the SP-500 is in wave iii-(5) of 3-[1]-P3.   It possible that this wave iii-(5) could drift upward today along the upper yellow channel line to about ES 1163 (1168 cash).  The 1168 cash market level is a key long-term pivot resistance.   However, it manages to break above this line, then a move to ES 1172 (1177 cash) could occur, as wave iii-(5) extends.  Eventually, I’m looking for a wave iv-(5) consolidation to remain above ES 1145 (1150 cash).  And a wave v-(5) to complete in the ES 1172 (1177 cash) area.  But if wave iii-(5) extends, then obviously wave v-(5) could move above ES 1172 (1177).  I have a stretch target of ES 1185 to 1195 (1190 to 1200 cash) for this wave up to complete.

Everyone should take a look at my SP-500 weekly chart and write-up from last night.: http://pugsma.com/2010/10/06/oct-5th-2010-sp-500-weekly-critical-juncture/  We are certainly at a critical juncture here in this 1163 to 1177 area.  If the SP-500 can break through this area then new highs above 1220 are extremely likely before year-end.  My thinking right now is that this wave 3-[1]-P3 might end here around 1163 to 1177 and then we’ll have some more consolidation in wave 4-[1]-P3 that should stay above the 1137 pivot and above the 1131 IHS neckline.  This will be the time that the bears are calling for a topping pattern and a drop back down to at least 954.  And they could be right (see my alternate count in red from the link above where P2 is not finished and needs to correct to 953).  However, my feeling is that after this wave 4-[1]-P3 consolidation in late Oct to early Nov, the SP-500 will mount a 5th wave 5-[1]-P3 run to new highs above 1220 by year’s end 2010.  This should fulfill the IHS target of 1251.   This my primary count and main focus.  I will not show the bearish alternate count from the weekly chart on the daily and small time frame charts until the level of 1123 is breached.  But I just want everyone to be aware of this possibility for your protection (trading stops) in case things begin to head back down rapidly from here.

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=195adcc8-a39e-42ca-8891-75e0671b6cf2

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=4b5f5655-0e02-4027-b071-67bb99698e59

ES Futures (6:56 am):

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