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October 13th, 2011: Update 1 – Morning

Posted by pugsma on October 13, 2011

12:00 pm EST:   Looks like 3-waves down to 1190 thus far, so may be one more wave down to the 1187 pivot to complete minor A of major [B] or major [2].   The 1210.66 level is the key marker now.  Above 1210.66 then, there is possibility that the major [A]-PB wave is not yet over and we’ll make a new high above 1220 first.

SP-500 5-min chart (11:50 am):

10:40 am EST:  The freestockchart.com data feeds for trend-lines and labels are down.   With the break below 1197.84 of wave i-(5)-5-[A]-PB, we can confirm that wave major [B] (primary) or major [2] (alternate) down has begun.    The first leg down for either count will be a 5-wave minor A that should hold the 1187 pivot support or worst case the 1177 pivot.

Since I’ve been a mREIT investor and trader during this past 2.5 years since the Nov 2008 low, I thought I’d take a quick look at the big picture wave count for Annaly Captical Managment (NLY).  Note that the NLY daily chart shown is dividend adjusted so this chart is only for the price appreciation on NLY.  From the bottom around $7 in Nov 2008 we have 5 primary waves up for P1 to $14 in Aug 2009.  There was P2 correction down to $11.5 in May of 2011 and another 5 primary waves up for P3 to $18 in July 2011.   Since July 2011, we have P4 correction down to $14.5.  I’m now expecting another 5  waves up for P5 of Cycle 1 to a target of $21.5 (where P5=P1).  This P5 high should occur sometime in late 2012 to early 2013.   So I’m looking for a 36% return on capital for NLY over the next year and half in addition to the 15% annual dividend for a total return of about 57%.  After 2013 the Fed will likely begin to adjust short-term rates higher and NLY will be a Cycle 2 correction.

NLY Daily Candles (10-13-11):

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