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Oct 11th, 2010: Update 2 – Morning

Posted by pugsma on October 11, 2010

11:20 am EST:  The confirmation for a bullish break-out will be if the SP-500 can close above the 1177 pivot resistance along with the VIX below 19.50.  This will mean that wave (5) of 3-[1]-P3 is extending and likely only at the very beginning of wave iii-(5). The  target area will be 1190 to 1200,  with an outside shot at 1220 in this wave 3-[1]-P3.

10:50 am EST:  VIX has hit 19.16 (-7.5%) this morning and has fallen below the lower wedge trend-line and lower Bollinger Band (BB).   Notice in Jan 2010 and April 2010 when the VIX fell below the lower BB, closed outside the BB and  then closed back inside the BB the next day it  triggered a VIX “Buy” or Stock “Sell” signal.  We will need to watch the VIX closely the next few days.  If it begins to rise and close back inside the BB, then it could signal an intermediate top is in place here at the 1168 area.  If the VIX keeps falling, then it could signal that the SP-500 is on an extended bull run for the forseeable future.

For the primary count on the 5-min chart, the Ending Diagonal (ED) has a maximum target of 1175.43 as I have it labeled for wave v-(5) of 3-[1]-P3.  For wave 4-[3]-P3, I’m expect a minimum retrace of 23% to the 1137 pivot and potentially much deeper.

SP-500 daily VIX chart (10:30 am):

SP-500 5-min chart (10:40 am):

SP-500 15-min chart (10:55 am):

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