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Oct 20th, 2010: Update 5 – EOD

Posted by pugsma on October 20, 2010

5:30 pm EST:  Here is the ES Futures Weekly Chart I spoke about earlier today in the comments section.  This weekly chart from early this morning (9:20 am EST) with ES still at 1165.  The point here is that the SP-500 broke above the last bear trend-line 2 weeks ago.  And yesterday’s drop to 1159.71 in the cash market was just a back-test of this break-out.   The back-test held and today we saw prices move aggressively higher.  For my primary count, I’m expecting the SP-500 to continue to consolidate in a wave 4-[1]-P3 above this last bear trend-line, before running up to the 1250 to 1300 area to complete wave [1]-P3 later this year.

ES Futures Weekly Chart (9:20 am):

5:00 pm EST:   The large push higher today brings several possible counts into a reasonable probability.  Here are all three counts I’m tracking right now.   All three counts are still very bullish over the intermediate term and forecast the SP-500 will reach between 1250 and 1300 by the end of 2010.

Primary (white):  Large wave 4-[1]-P3 triangle count.  The drop to 1159.71 yesterday was wave (a) and the rise to 1182.93 today was wave (b) of the triangle.  Both moves look like 3-wave moves.  The triangle should be made up of 5-waves, each of which are sub-divided into 3-wave moves (i.e. 3-3-3-3-3).  Next I’m looking for a drop towards the 1168 pivot support for wave (c) next.  This triangle may take until the end of October to play-out.  Once complete, the wave 5-[1]-P3 thrust should head towards a target of 1250 by year’s end.   However, assuming the triangle is a “bull flag” on flag pole of 146 points, then the maximum target is 1306 (i.e. 1160 + 146).

1st Alternate (blue):  This is a very bullish near-term count that has the SP-500 still in wave (5) of 3-[1]-P3.   The 1185.53 high on Monday 10/18 was only wave i-(5) and yesterday’s nearly 50% retrace to 1159.71 was wave ii-(5).  Today’s price action was the beginning of wave iii-(5).  Wave iii-(5) should reach around 1210 and I have this final wave (5) of 3-[1]-P3 reaching a target of 1215 to 1230 over next two weeks.  For that level there will be a wave 4-[1]-P3 consolidation before a wave 5-[1]-P3 push to at least 1250 and most likely 1300.

2nd Alternate (red):  The count assumes that wave 4-[1]-P3 will be a Zig-Zag or double Zig-Zag that will correct much deeper to at least 1150 (23% retrace) and maybe even 1130 (38% retrace).  Today’s move up to 1182.93 was wave (b) of the first Zig-Zag and next we are looking for a drop down for wave (c) to at least 1157, if (c)=(a) and more likely 1150.  A second ZZ could even take the price down to the 1130, 38% retrace target.  This correction will last a week or two.  After the deeper correct the SP-500 will reach a maximum year-end high between 1220 and 1250.

The primary count, as always, is my preferred and high probability count.  But, I believe the bullish 1st alternate count has nearly an equal probability at this point.   As long as the SP-500 stays above the 1168 pivot these two count are very likely.  Also the 13-day EMA has moved up to 1166.  So continuing stretch above the 13-day EMA is very bullish sign for the SP-500.

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

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