January 3rd, 2011: Update 1 – EOD
Posted by pugsma on January 3, 2012
5:50 pm EST: Today’ large gap up and move to 1285 initially looked like a confirmation of the primary count. However, there is a fly in the ointment so to speak tonight after the close. After the initial move from 1258 to 1285 at the open, the SP-500 failed to move higher throughout the day and closed at 1277. This has set-up a negative divergence on the McClellan Oscillator ($NYMO) at an over-bought level of +47, with respect to Dec 23rd SP-500 closing price of 1265 and $NYMO of +51. Typically this type of negative divergence on the $NYMO at an over-bought level above +40 will result in a sizable SP-500 pull-back over the next several days, so it’s time be cautious here.
The primary count is that wave iii-(3) of minor 3 of major [3]-P1-C3 ended today at 1285 at the iii=1.62*i target of 1285 instead of the iii=2.62*i target of 1299. The pull-back today to 1274 is part of a wave iv-(4) correction with targets of 1274/1272. From here I’m expecting an extended wave v-(3) with a first target of 1317, were v=1.62*i. There is a pivot at 1315 that could be the target. This primary count goes invalid with a move below the wave i-(3) high of 1264.12.
The alternate (blue) count is that the move to 1285 completes wave (1) of minor 3 of major [3]-P1-C3 and now a significant wave (2) correction has begun. The initial targets for the wave (2) correction are at 1266 (23% retrace of wave (1)), 1254 (38% retrace) and 1243 (50% retrace). There is pivot support at 1257 and 1254 that could be the target area for wave (2). This count will go invalid with a move above 1288.50, where wave iii-(1) will become the shortest wave of (1), which is an E-wave rule violation.
So we are looking for a move above 1288.50 to confirm the primary count or a below 1264.12 to confirm the alternate count.
SP-500 5-min chart (EOD):
SP-500 15-min chart (EOD):
SP-500 60-min chart (EOD):
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