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March 12th, 2012: Update 1 – EOD

Posted by pugsma on March 12, 2012

5:20 pm EST:  A very boring day relative to the SPX price action. However some clues emerged in terms of the VIX and $NYMO behavior today.   The VIX took a severe drop and closed below its lower BB at 15.64 vs 15.70.  This is the initial condition necessary to set-up a potential VIX Buy, SPX Sell signal.  Now we need to see the VIX close back inside its lower BB to trigger the signal.  Also the $NYMO reversed from -1 on Friday to close at -9 today.  This reversal, plus being below the +20 level set-ups up a short-term topping signal today that could lead to a nice size correction in the SPX price.   Thus, there is good chance that both the VIX and $NYMO are indicating that the primary count is correct and there should now be a strong sell-off for minor C of major [4]-P1-C3 down to the 1340 to 1325 area.

Primary count is that minor B of major [4] is playing out as a flat of expanded flat, in which case the final targets are 1378 (B=A) to 1387 (B=1.23*A).  Once minor B is complete at or be the 1386 pivot resistance we’ll see a rapid minor C drop to 1340 (C=A) to 1325 (C=1.62*A).  The 23% retrace of major [3] is at 1328.  The $NYMO closed near zero on Friday.  For this primary count to be correct, then I’d expect the $NYMO rally to fail below +20 on this minor B-wave move and then set-up a positive divergence above -87 in the completion of minor C of major [4]-P1-C3.

The alternate (blue) is that wave (3) of minor 5 of major [3]-P1-C3 ended at 1374 on Friday and now a small wave (4) correction is either complete 1366 today.  The next move should be a wave (5) of minor 5 toward the 1394 target, here minor 5 = 0.5* minor 1.  There is a higher target for minor 5 at 1408, where minor 5 = 0.62*minor 1.  In this latter scenario wave (3) will likely extend to the (3)=2.62*(1) target of 1389, so there will be a continued strong move higher to complete (3).  There is an Inverse Head and Shoulders (IHS) or Cup and Handle (CAH) target of 1410 on the 15-min chart should the 1375 level be breached decisively.

Support is at the 1363 pivot.  Resistance is at the 1372 pivot and then the 1386 pivot.

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):

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