Oct 26th, 2010: Update 4 – EOD
Posted by pugsma on October 26, 2010
6:15 pm EST: I did notice one slight variant of the wave 4-[1]-P3 triangle, if it’s an ascending and not a contracting version. That would be the wave (c) might have completed today at 1177.71 and wave (d) up to the 1196 area is underway. Then there will still be an (e) wave drop back towards the 1177 pivot before launching higher to the same 1232 target (i.e. 1196 + (1196-1160) = 1232).
SP-500 5-min chart (EOD):
5:55 pm EST: OK I’ve been looking at the charts more and I just don’t like either of the counts (primary or alternate) that I’ve been carrying the past couple days. I don’t think this set of overlapping waves is an Ending Diagonal (ED) for wave 3-[1]-P3. It makes much more sense that it’s all part of a wave 4-[1]-P3 triangle corrective that is buying time (not price) until Nov 2nd/3rd. The NDX (Nasdaq-100) has already set a new 2010 high. The DOW-30 is within about 130 points of making a new 2010 high. The SP-500 and Russel-2000 are lagging, but not far behind. They are likely to catch up and make new 2010 highs sooner rather than later. This wave up off 1040 has just been too strong to turn-back now. Ever since achieving the bull cross of the 13-day EMA over the 34-day EMA on Sept 10th, the SP-500 has stayed above the 13-day EMA (currently at 1174).
This powerful wave off 1040, has frustrated bull and bear alike. The bears keep thinking it part of a large A-B-C corrective and that it was going to turn around at (1080, 1105, 1120, 1150, 1168, 1177…) and head for 950 to 870. The bulls kept doubting it thinking it was due for a break to let them add more longs, but always fearful that a big drop was just around the next turn. This wave is not letting the bears short it or the bulls jump back in at a significantly lower price. I don’t expect that should change much its final targets are achieved. And I don’t believe those targets have yet been met.
So the primary count is that the SP-500 is in wave 4-[1]-P3 contracting triangle. Specifically it’s in wave (c) of 4. I’m looking for wave (c) to test 1168 pivot area over the next day or two. Then wave (d) to test 1189 before (e) holds the 1177 pivot support and launches wave 5-[1]-P3 towards 1232 to 1251. The 1232 level is the triangle target and the 1251 level is the large Inverse Head and Shoulders (IHS) target. Also, 1230 is the 62% retrace of the drop from 1575 to 667. The April high of 1220 came up just a bit shy of hitting this target. I think this wave will reach at least 1230. From the there the markets will take a breather. And the shape and depth of the next significant correction will tell us a lot about what type of market we’ll be in for the next couple years.
SP-500 15-min chart (EOD):
SP-500 60-min chart (EOD):
SP-500 Daily chart (EOD):
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