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Oct 22nd, 2010: Update 4 – EOD – SP-500 Topped?

Posted by pugsma on October 22, 2010

I have decided to make the final week of October “Free Week” here are PUG SMA, LLC.  I will leave all of the posts unprotected between now and Friday, Oct 29th.  I do this so that the readers can get a feel for what the Premium Intra-Day post are like.  Also, Tuesday Oct 26th, 2010 will market the 1 year Anniversary of the establishment of this blogYou can read the first blog post here.  Interestingly (ironically) I began the blog right in the middle of 80 point correction in the SP-500 from 1100 to 1020 in late October 2009.  Could we be ready for a similar correction now?    This “free week” is a gift from me to all the loyal readers over the past year.  There have been over 1.3 million pages views since the blog began in on Oct 26th, 2009 and almost 800,000 views since June 1st, 2010 when I moved to this new Word Press home.  I want to thank everyone for reading and especially those that comment and contribute.  If you are interested in joining the Premium Service for November ($30 per month) or Nov/Dec ($50 or $25 per month, $10 savings), please drop me an e-mail at pu_gridiron@yahoo.com.

9:15 am EST (10-23-10):  Here is the SP-500 weekly candles chart.  It’s actually very bullish for the intermediate term (next 3 to 4 months).   RSI has moved solidly above the 50 and into the bull zone of 50 to 70.  The MACD had a bull cross back in September and the Histogram is above the zero line and increasing.  However, notice the 200-week SMA at 1195.  The SP-200 hit 1189 this week and has printed a bearish weekly “hanging man” candle.    The SP-500 has been rejected at the 200-week SMA twice since the market peaked in Oct 2007.  Once in August 2008 around 1325 and a second time more recently in April 2010 are 1220.  After testing the 200-week SMA near 1195, it’s likely that the SP-500 will fall back toward the 50-week SMA that sits at 1117 this week and is rising.  Combing this weekly chart with the bearish daily chart below, you see why I believe the SP-500 will consolidate in a wave 4-[1]-P3 between 1130 and 1200 over the next 4 to 6 weeks.  It will build up some needed energy for the wave 5-[1]-P3 push towards 1250 to 1300 going into 2011.  Later this year, if I’m correct, we should get a “Golden Cross” on the weekly chart of the 50-week SMA above the 200-week SMA.  This will confirm that the longer term secular bull market which began from March 2009.

SP-50o Week Candles (10-22-10):

4:30 pm EST:  After studying the SP-500 Daily Candle Chart this afternoon, I have concluded that the SP-500 topped in wave 3-[1]-P3 at 1185.53 on Monday Oct 18th.  What has been playing out this week are waves (a) and (b) of an expanded flat or the first wave (a) of a large triangle for wave 4-[1]-P3 that will form between 1131 and 1189 over the next month.  I’m expecting next week to a red week with the SP-500 falling all week and making a low near 1148 by the end of the week or early the week of Nov 1st.   It’s possible that the SP-500 could fall to the 1137 pivot support, however it should remain above the 1131 neck-line of the large IHS and above the wave 1-[1]-P3 peak of 1129.

Signs of the Top of Wave 3-[1]-P3:

1. Dr Copper (JJC as a Proxy) showing a negative divergence with the SP-500 Price on the Daily Chart.

2. RSI Negative Divergence on Daily Chart.

3. MACD Bear Cross of signal line and MACD histogram below zero line on Daily Chart.

4. McClellelan ($NYMO) Oscillator below zero line and month-long negative divergence with SP-500 price.

The SP-500 just achieved a “Golden Cross” of the 50-day above the 200-day SMA at 1122 today.  But ironically just as the “Death Cross” signaled a bottom (i.e. not a top) on July 1st, this Golden Cross comes as the market is topping (i.e. not bottoming).

SP-500 Daily Candles Chart (10-22-10):

The primary count is that wave ii-(c) of 4-[1]-P3 is underway and may have ended today near 1185.  The next move is a wave iii-(c) drop to below the 1168 pivot support.  The final target for wave (c) is 1148, where (c)=1.62(a).  But it’s possible it could extend lower to the 1137 pivot or even approach the 1131 neck-line.

The alternate count is that the SP-500 is still topping in an Ending Diagonal (ED) for wave (5) of 3-[1]-P3.  The ED is completing wave v-(5) and may make one more push up early next week to the 1192 area.  The maximum for this ED count is 1202.  Even if this count plays out early next week, the next move for the SP-500 is deep retrace to same 1131 to 1148 area as the start of wave 4-[1]-P3.

Once wave 4-[1]-P3 ends sometime in November or early December, I’m still looking for wave 5-[1]-P3 to reach the large IHS target of 1250 by the end of 2010 to early 2011.

Enjoy your weekend !!!

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

SP-500 Daily Chart (EOD):

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