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Oct 19th, 2010: Update 2 – Morning

Posted by pugsma on October 19, 2010

11:15 am EST:  Here is the 60-min chart with a mid-channel line that looks like it could contain the wave 4-[1]-P3 drop around 1150 for the next week or two.

SP-500 60-min chart (11:10 am):

10:30 am EST:  With the drop to 1166.92 this morning, there was a lower channel breach on the 60-min, 15-min and 5-min charts.  This is the first breach of the lower channel since the wave 3-[1]-P3 began off the 1040 low of August 31st.  This is a bearish event and typically (but not always) signals the top of the wave has been put in.

For the primary count the drop to 1166.92 today is wave (a) of 4-[1]-P3.    The SP-500 could bounce between the 1167 and 1177 pivots in a wave (b) for a few days, before a drop in wave (c) to the first target area of 1152 (23% retrace of 3-[1]-P3).   The secondary target for 4-[1]-P3 to complete is at 1131 (38% retrace of 3-[1]-P3).  It’s critical for this wave 4-[1]-P3 to remain above the large inverse head and shoulders neckline of 1130 and the wave 1-[1]-P3 high of 1129.  Dropping below 1129 would be a wave 4 in wave 1 violation and could signal a much deeper retracement will occur.  But we are a long way away from 1129 right now, so we’ll discuss this more if the SP-500 trades closer to 1129.

The alternate count would be that this  mornings low of 1166.92 was part of a complex double corrective for wave iv-(5) of 3-[1]-P3.  I have shown it as an abc-x-abc double Zig-Zag for the time being.   Since the 1168 pivot has held thus far, a move to a new high above 1185.52 in wave v-(5) is still a potential.  A good target for this alternate wave v-(5) high is at the 200-week SMA at 1196.

I favor the primary count about 2 to 1 over the alternate right now.  And if the SP-500 can close under the 1168 pivot, then it’s near 100% for the primary count.  Conversely if the SP-500 close above the 1177 pivot, the alternate count becomes more likely than the primary.

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=ca37d4ad-7dfa-4174-8ef5-0f84404f3258

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=3305d7dc-a9f9-4ce4-bdea-f70b4feb8775

SP-500 5-min chart (10:15 am):

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


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