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Oct 21st, 2010: Update 2 – Morning

Posted by pugsma on October 21, 2010

11:00 am EST:  A very nice move above the old high of 1185.53, producing  “popped stops” for the bearish traders.  Recall I warned about getting too bearish yesterday in the comments section, as I saw the real possibility of a near term bullish (1st alternate count playing out).  And as I indicated in the pre-market update, after 1185.53 you need to watch for 1191 and the 1196 (200-week SMA).

The large wave 4-[1]-P3 triangle primary count has been eliminated.

The 1st alternate count is now the primary count.  The SP-500 is still in wave 3-[1]-P3 and in particular in wave iii-(5).  I’m looking for wave 1 of iii-(5) to terminate around 1191 to 1196.   Ultimately, I think wave v-(5) of this count could reach the April high of 1220 by the Nov 3rd Fed Policy Announcement date.  Notice the new price channel (yellow) thas has from since the drop to 1159.71.

The new 1st (and only) alternate is that with move to 1191 is the (b) wave of an expanded flat count for wave 4-[1]-P3.  After the move to 1191, there will be a nasty 5-wave drop of 42 points, (c)=1.62*(a), to the 1150 area of support.  I don’t give this count much of a probability right now.  The SP-500 is now decisively above both the 1168 and 1177 pivot supports.   The SP-500 would have to close back under 1177 to make this count more likely.

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=59dfcb3e-a53e-43ce-acc7-a7ca534ecd40

SP-500 15-min chart (10:45 am):

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