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May 7th, 2014: SP-500 EOD Update

Posted by pugsma on May 7, 2014

 4:50 pm EST:  The SPX and RUT bounced off the critical support levels of 1860 and 1098 discussed in last night’s blog post.  The SPX closed back above all three key short-term moving averages at 1878.

The primary count on the SP-500 is that wave ii-(c) of minor 5 of major [5]-P3-C1 bottomed at the 78% retrace of 1860 today.  The SP-500 should now make a new all-time high during the minuette waves iii and v of minute (c) of minor 5.  There is iii-(c) target at 1925, where iii=1.62*i.   There is a (c)=(a) target at 1921 and the (c)=1.23(a) target is at 1937 which agrees with the P3=1.23*P1 target of 1941.  Note there is a small IHS on the 15-min chart with head at 1850, neckline at 1888 and target of 1925.  There is also a larger IHS pattern on the 60-min chart with head at 1814, neckline at 1894 and target of 1975.   I suspect the SP-500 will top P3-C1 somewhere round 1941 during late May to early June.  This will complete the major [5] ending diagonal that began nearly a 1 year ago in August of 2013 from the major [4]-P3-C1 low of 1627.   However, the maximum extension of the ending diagonal is at 1973 and there is a (c)=1.62(a) target at 1965.  Within the ending diagonal yellow trend-lines this would target the August 2014 time frame should the SP-500 decide to grind slowly higher this summer.   The primary count as labeled remains valid above the 1850 wave (b) of minor 5 low, but it will take a break below 1814 to fully confirm that P3-C1 has topped and the ending diagonal is complete.

The alternate (blue) count is that the SP-500 completed P3-C1 at 1891 as a failed minor 5 wave of major [5]-P3-C1.  This means that the P4-C1 correction is now underway in wave minor 1 of major [A]-P4.  I’m looking for minor 1 target the 1814 pivot by mid-May.  The move from 1891 to 1867 is wave (1) of minor 1 and this move up to 1886 is a 78% retrace for wave (2) of minor 1.  Wave (3) of minor 1 is underway headed for the (3)=2.62*(1) target of 1823.  Ultimately, major [A] should reach the 1730 pivot in July and P4-C1 should end around the 38% retrace target of 1581 later this fall.  Also from the P3-C1 top at 1891, the P4-C1 wave should correct back to where the ending diagonal began at 1627 and reach the wave 4 of previous degree at the major [4]-P1 low.  It will take break above the ATH of 1897 to invalidate this alternate (blue) wave count and confirm the primary wave count.

SP-500 15-min chart (EOD):

PUG SP-500 15-min chart EOD 5-7-14

SP-500 60-min chart (EOD):

PUG SP-500 60-min chart EOD 5-7-14

SP-500 4-hr chart (EOD):

PUG SP-500 4-hr chart EOD 5-7-14

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