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June 27th, 2011: Update 2 – EOD

Posted by pugsma on June 27, 2011

4:30 pm EST:  It was an important day for the primary count (white).  The bears failed to take out the 1257 pivot with the overnight night ES Futures bottoming at 1257 (SPX 1262 cash equiv) and then the SPX cash market rallying all the way back up to 1284.91 and a close at 1280.10.   That is big 23 point rally (including the ES futures) after holding the key 1257 pivot for a 3rd time in the past 8 trading days.

Primary count (white) has wave i-(3) of minor 3-[1]-P5 completed at 1284.91 today.  I’m looking for wave ii-(3) to back test-test the broken down channel at about 1278 for a 38% retrace.  The target for iii-(3) is 1307.   I’m looking for iii-(3) to break the IHS neckline at 1298 and trigger the run to the IHS target of 1338 to complete major [1]-P5 by mid-July.  From there we could get a healthy sized major [2]-P5 correction as the US debt ceiling talks head into the late July to early August crunch time.    The resolution of the US debt ceiling and strong Q2-2011 earnings will trigger the major [3]-P5 explosion higher.

The alternate count (blue) is that minute (2) of minor 5-[C]-P5 completed today at 1284.91 as a Zig-Zag that retraced 62% of the minute (1) drop.  From there I’m looking for minute (3) to break the HS neckline at 1258 and trigger a drop the HS target of 1228 to complete major [C]-P4 by early July.  This drop to 1228 would coincide with move European sovern debt troubles and a continued stand-off in regard to the US debt ceilng resolution.  Stong Q2-2011 earnings and the resolution of the US debt ceiling will trigger the beginning of P5.

So we the tale of two Head and Shoulder Patterns.  The first one to break its neck-line (i.e. 1298 vs 1258) will decide the markets near term fate.  However, the intermediate term is a bullish P5 wave to a new high above 1371, in either case.

Support is at the 1257 pivot.   Resistance is at the 1291 and 1303 pivots.

Don’t forget to renew you service for Q3 or Q3-Q4 by making Google eStore payment, if you plan to stay on past Thursday, June 30th.  Thanks.

SP-500 5-min chart (EOD):

SP-500 15-min chart (EOD):

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