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January 17th, 2014: SP-500 EOD Update

Posted by pugsma on January 17, 2014

4:40 pm EST:   The SP-500 has spent the first 12 trading days of 2014 in a tight range from 1851 to 1815.  The daily Bollinger Band (BB) width on the SP-500, VIX and $NYNO charts have become very narrow indicating that a large direction move is coming soon.  Agreeing with this fact is that the wave counts reflect that we are at an inflection point with a break above 1851 or below 1815 to determinate the intermediate term trend.

Primary count is that wave ii-(3) of minor 5 of major [5]-P3-C1 has ended at 1835 at the c=a target and the 50% retrace of wave i-(3).    Now wave iii-(3) should be underway moving towards at 1893 target, where iii=1.62*i.   The wave (3) target is at 1909, where (3)=1.23*(1) and ultimately P3-C1 should ended in the 1931 to 1941 target area over the next month or two.  This primary count remains valid above the recent 1815 low for wave (2).

The alternate (blue) count has wave v-(5) of minor 5 of major [5]-P3-C1 complete at 1851 and the P4-C1 correction is just beginning.  There is a double top potential at 1850 that measures to 1780 which would be the minor 1 of major [A]-P4-C1 wave down before a minor 2 bounce.  The move from the P4-C1 top 1851 to 1835 so far looks like waves i-ii-iii of (1) of minor 1.   I’m looking for wave (1) to reach the 1815 pivot before a wave (2) bounce of 50% to 1833.  Waves (3), (4) and (5) should take minor 1 down to the double top area of 1780.   Note that there is also a large potential head and shoulders topping pattern (shown on the 60-min chart) that began in late November that should help take the major [A]-P4 wave down to about 1687 to 1730.  Ultimately the P4-C1 correction should be at least a 23% fib retracement of P3-C1, which will drop the SP-500 back down to the 1687 pivot area over the next 6 to 9 months.

Note that it will take a break below the 1815 low to make the alternate (blue) count more probable.  As long the SP-500 stays above 1815, the intermediate trend remains higher via the primary wave count.

Have a nice holiday weekend.

SP-500 15-min chart (EOD):

SP-500 15-min chart EOD 1-17-14

SP-500 60-min chart (EOD):

SP-500 60-min chart EOD 1-17-14

SP-500 4-hr chart (EOD):

SP-500 4-hr chart EOD 1-17-14

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