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Dec 20th, 2010: Update 3 – EOD

Posted by pugsma on December 20, 2010

4:50 pm EST:  Another slow day with the market grinding upward.   The SP-500 finally reached the large Inverse Head and Shoulders (IHS) target of 1250 and my year-end target set on Sept 1st, 2010.  The move up could actually be over for while as all of the key E-wave criteria were met today, but let’s look at the possibilities.

 All of these recent price action looks like a series of small a-b-c patterns with an upward bias.  That brings up a potential Ending Diagonal (Ed) scenario for the wave (5) of the alternate count.  It looks like three minuette degree waves i-ii-iii of the ED are in place and there might be one more wave iv-(5) low around 1240/1245 before a wave v-(5) move higher slightly above today’s 1250.02 high.  If 1240 ends up being the wave iv-(5) low he ED max is about 1257.  This fits with the market moving gradually higher the rest of this week into the Christmas Holiday, to complete major degree wave [1]-P3 just below the 1257 pivot resistance.  From there I’m expecting a major degree wave [2]-P3 correction of about 95 points (-7.5%) down to 1165 going into late Jan early Feb.

The series of a-b-c moves also fits the primary count for a B-(4) wave expanded scenario, as the A and B waves of the flat should be 3-wave, a-b-c moves and they are.   Today’s price high of 1250.20 fits my expanded flat target for B-(4) precisely.  So now we should be looking for  a 5-wave C-(4) drop to 1227 going into the end of the year for profit taking.  Then wave (5) of 5-[1]-P3 will edge back up to the wave (5)=(1) target of 1260 by mid-Jan.  And of course this will be followed by the same major degree wave [2]-P3 drop to 1165 by mid-Feb.

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

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