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Nov 3rd, 2010: Update 3 – Mid-Day

Posted by pugsma on November 3, 2010

12:40 pm EST:  This is looking like a wave (2) retrace of 50 to 62% to the 1184 to 1187 support.

So per the conversation I was having with Simon (SMJ) in last night’s EOD update, this consolidation period from about mid-Oct to now looks like a large ascending triangle.  But at what wave degree should it be labeled?  It really makes no sense to be  a minuette degree wave iv-(5), as a minuette degree wave is typically 1 to 3 days and a minute degree is 2 days to a week.   Therefore it makes the most sense as a minor degree wave that last a week or two.  So therefore it should be labeled as wave 4-[1]-P3 in the primary count. 

Recall wave 1-[1]-P3 was a leading diagonal (LD) from 1011 to 1129.  The we had a 78% retrace of the LD from 1129 to 1040 in wave 2-[1]-P3 that took about 3 weeks and took the form of a simple Zig-Zig (a-b-c).  Since the 1040 low, a powerful wave 3-[1]-P3 has unfolded over 6 weeks until about mid-October when it hit the tough pivot resistance bands of 1168, 1177,  and 1187.  It makes sense that this 3 week consolidation for wave 4-[1]-P3 is a triangle, which alternates with the wave 2-[1]P3 Zig-Zig. 

So now I’m expecting the break-out of this ascending triangle, to play out as a final impulse wave 5-[1]-P3.  The first target is the triangle target of 1232.  But there is also the inverse head and shoulders target of 1251.   For this primary count I’m expecting a continue melt-up towards 1232 to 1251 over the next few weeks.

OK, so what is the alternate count?  It’s that this wave 3-[1]-P3 is terminating as an ending diagonal (ED) wave (5).  The maximum target for this ED is 1208.  This wave (5) began at the 1132 low in early October and it’s been working it’s way gradually higher ever since.  The conclusion of this wave v-(5) should happen today or tomorrow and then we can expect a retrace back to where it began at 1132 for wave 4-[1]-P3, but it could find support in the 1150 to 1160 area as well.  It will probably take the form of a complex corrective like a double or tripel Zig-Zig over the next week or two.  After this sharp sell-off in wave 4-[1]-P3, there will be another impulse higher in wave 5-[1]-P1 toward the end of the year that targets 1232 to 1251.

I have updated the counts to reflect this thinking.  It does not change my targets from the EOD post yesterday, but it does change the wave degree labeling to make more sense with the time frames involved.   So there you have it.  The primary count is a continued melt-up for several more weeks or the alternate count that has a sharp (-5%, 40 to 70 point correction) and then a continued melt-up into the end of the year.

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=bd615766-91de-4e65-95f6-83c611f49d1d

SP-500 15-min chart real-time link: http://www.freestockcharts.com?emailChartID=f5158d50-ba71-4178-9037-b69e481ec6f3

SP-500 5-min chart (12:00 pm):

SP-500 15-min chart (12:00 pm):

SP-500 15-min chart (11:55 pm):

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