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Nov 19th, 2010: Update 2 – Morning/Mid-day

Posted by pugsma on November 19, 2010

1:10 pm EST:  Remember a few days go how discussed how important it was to hold the 50-day SMA, and the MACD and RSI uptrend support lines on the daily candle chart with indicators.  Well bar a “major sell-off” into the close today, they all held this week and the Full STO bottomed a 20 and produced a nice bull cross.  Also, I’m looking for the SP-500 to close the week above the key 200-week SMA at 1190 today.

What we should be looking for in minor wave 5-[1]-P3 is for the daily RSI to set a negative divergence somewhere under the wave 3-[1]-P3 peak of an RSI that hit 80.  So has wave 5-[1]-P3 unfolds relatively slowly going into the end of 2010 to early 2011 the daily RSI will like work it’s way back up toward 70 or even 75 and peak near the top of wave 5-[1]-P3.  That will signal the end of a nice bull from the Primary Wave 2 (P2) low of 1011 to about 1251 for major wave [1]-P3. Then it will be time to exit longs and pick-up some shorts for the major wave [2]-P3 correction back down to the 1130 area in Jan-March. From there is a launch of major wave [3]-P3 upward to 1600 to 1700 going into 2012.  And you will certainly want to be part of that bull-train.

SP-500 Daily Candles (12:41 am):

10:45 am EST:  Here is the updated 15-min chart.  I added the bearish 2nd alternate in red just for completeness sake. I’d give the bearish count less than 10% chance at this point.  The other 90% is divided about equally between my primary (white) and 1st alternate counts (blue) that have the wave 4-[1]-P3 price low in place at 1173.  I lean towards the large triangle to buy more time, but I could see a case for wave 5-[1]-P3 being under way already too.  So when the SP-500 gets to the 1213 to 1219 resistance area, we’ll just have to see if it breaks through as part of wave (3) of 5-[1]-P3 and heads to a new high above 1227 or retraces back down to 1194 in a wave (c) of 4-[1]-P3 of the triangle.

SP-500 15-mi chart real-time link: http://www.freestockcharts.com?emailChartID=d171ecc1-a828-404a-882e-e46a5590bd82

SP-500 15-min chart (10:35 am):

10:25 am EST:  For the primary count I have labeled A-(b) complete at 1200, which is a 27 point move from 1173 to 1200.  The B-(b) wave is underway this morning with a retrace target of <= 50% or 1187.  So far the SP-500 hit a low of 1189.44.  The targets for C-(b) are 1214 to 1216 (i.e. C=A).

I’m also going to start carrying the more bullish alternate count (blue) that 1173 was the completion of 4-[1]-P3 and wave 5-[1]-P3 is underway.  In this count the move to from 1173 to 1200 is minute degree wave (1).  Today’s retrace is wave (2), with targets of 1183 (62% retrace) and 1187 (50% retrace).  The wave (3) target is 1226 to 1231 where wave (3)=1.62(1).

For both counts, I’m expecting support to hold at the 1187 pivot or worst cast the 1179/1184 gap support.  And break-down through the 1179/1184 gap is bearish and would negate the primary counts.   The alternate count can tolerate a test of the 1173 level in a deep wave (2) retrace, but it can’t be breached.  If 1173 is taken out, then minor wave 4-[1]-P3 is like headed towards a 38% retrace target of 1156.  This would be a bearish 2nd alternate (red) that would have the move to 1200 as an (x) wave a 2nd ZZ headed for 1156.  I’m not showing this on the chart, as of now.

For both the primary and alternate counts I’m expecting a bullish Thanksgiving week.

SP-500 5-min chart real-time link: http://www.freestockcharts.com?emailChartID=32527ff6-5a57-47fd-9c94-b3f56fa081e6

SP-500 5-min chart (10:10 am):

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