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July 26th, 2011: Update 2 – EOD

Posted by pugsma on July 26, 2011

5:40 pm EST:   The SP-500 price action followed the double ZZ count I laid-out at the EOD yesterday very well today.  We ahd an (a) wave drop this morning to 1329.59 and a (b) rise to 1338.51 this afternoon.  And toward the end of today the move down off 1338.51 looks like the beginning of the (c) wave of the 2nd ZZ.   The targets for the primary count (white) for this (c) wave are 1324, where (c)=(a) and 1314, where (c)=1.62*(a).    This agrees well with the fib retrace targets of 50% to 1321 and 62% to 1315.  This drop will complete minor 2 of [3]-P5 and we can expect an aggressive more higher for minor 3 of [3]-P5 once it completes.  I’m looking for 3-[3]-P5 to reach a level above 1400 over the next month or two on the way to P5 completing near 1454 in mid-Oct to mid-Nov.

However, after the close I spotted a rather nice descending triangle that may have completed near the at 1330.50 late today.   In a rising market (like we have off the 1296 low), a descending triangle is bullish.   It will break upward aggressively once the (e) wave is complete.  So for the this descending triangle, it would be the completion of the minor B of major [3]-P5 of the large ending diagonal (ED) scenario of the alternate count.  We should expect an aggressive break upward toward the 1372/1386 pivot area beginning as early as tomorrow morning.   This should start to build in the ES Futures overnight and we could have a “Gap and Go” tomorrow morning.  But sometimes an (e) wave of a triangle will dip just slightly below the lower flat of the descending triangle (say to 1327 tomrrow AM or the 38% retrace fib) before a blast off higher.  The minor C-[3]-P5 target is 1382, where C=A.  Major [4]-P5 would correct back slightly below 1356 before major [5]-P5 of the ED ends near 1386 in late August. 

Also remember that a Wave 2 can not be a triangle. So if we get the immediate break upward and out of the triangle tomorrow, there is a good chance that it was the B-[3]-P5 wave of the Ending Diagonal Alternate count (blue).   We actually need this immediate blast-off tomorrow to avoid a potential bear cross on both the 4-hr and Daily MACD’s.   So even we get the bigger dip of the primary count down to 1315/1321 tomorrow, the market needs to turn-around very quick at these levels.  Tomorrow is very key day for the continue upward price movement.

Support is at 1330 and then the 1315 pivot.  Resistance is at 1344 and then the 1363 pivot.

SP-500 5-min chart (EOD):

 

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

SP-500 4-hr chart (EOD):

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