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S& P (mini) Market Update for August 10, 2009

 

“From the desk of Master Che”

 

8/10/09

2:12EST (a.m.)

The 13 day time price cycles (13 day from low) don’t match up with current compression patterns. I’ll get back to this disparity on a later date briefly illustrating the two different time cycle options at hand.

 

I prefer to outline what is crystal clear.

 

Intermediate Term Until 10-11/09 (Oct/Nov 09):

C/T (Compression Tunnel) from 1/05/0 to 1/3/09

 CASH Prices

Pointing Up  

Equalizer: 805.32  

Up Price Target: 1221.70

Down Price Target: 539.60

This Bear Rally (from 666.79) terminates in the 1221/1227.00 price region. We are blessed with numerous road maps, thereby giving us an exact and exclusive itinerary in order to navigate the journey up to 1221/1227. Although only at 1035/1080 do we have solid confirmations.

 

 Short Term: 3 to 7 days.  

Futures Prices

 This current parabolic move up from 865.2,

will reach 1025.00 to 1035.00, before any significant correction occurs.

Only the maximum depth of this correction is clear which is 949.00 to 954.00.

The minimum depth appears to be 33%, although once we reach 1025.00 to 1035.00 I’ll be able to confirm this.

 

Basically we have 2 options at hand for the Upward  price movement (along with the price time cycles) The first option is a move up to 1021.75.

Then at 1021.75 a short lived pullback to 995.75 to 999.00 then a move back up to 1035.00. 

Although it’s quite significant how we reach 1035.00,

Due to the fact we are developing a medium sized compression tank, if we head straight up from current levels to 1038.00.

This potential move up must mirror the last move up from 939.50 to 976.50 in time duration and compression angles in order to qualify as a compression tank.

 

The last time we completed developing a compression tank was a Large compression tank at 1289.00 (cash) on 9/19/08. Thirteen days later we reached 837.00. Therefore the next move up is critical regarding this pattern.  

 

Very short term:

 Buying support at 995.75 to 999.00.

There is a possibility we reach 987.00,

Although today I’m expecting not to trade below 995.75 to 999.00.

 

Below 995.75 takes us down maximum to 984.00.

 

 

A few words regarding our move up from 865.25 to current levels. 

This move up is due to a previous C/T from 5/7/09. I’ve already spoken of this C/T a few times, it’s an extraordinary C/T I’ve yet to have seen one like this C/T, Which stumped me. Here’s the respectful devil.

Here’s the  C/T from 5/7/09 Equalizer: 909.50 Up Price target: 954.00 Down Price Target: 864.75 Upon completing this pattern we headed down reaching 871.00 which is 24.00 pts below the lower outer wall (shield) of the C/T then after failing to reaching the down price target we reversed back up reaching 953.00 again failing to reach a price target, 953.00 which is 28.75 points above the upper wall of the C/T, as always when we come so minutely close to a price target yet fail to reach it, we always reverse, which took us back down to 865.25 and again failing to reach a price target. 865.25 is 29.25 points below the lower C/T wall.

 Then at 865.25 we reversed back with record volume on the turn and we never looked back.  24.00 + 28.75+ 29.25 = 82.00. As I mentioned before some C/T pattern have extensions. Depending on the intra price movement until we reached an price target. All intra price movement 33% over and above qualifies as a potential extension. Above 50% confirms. Never the less we then must add the 82 points (extension) to the up price target which is 1035.00. Now as always I always confirm my calculations. This pattern I confirmed with a rule of thumb we all trade with, the famous head and shoulders chart pattern. This C/T developed at the top left shoulder of the recent infamous failed head and shoulders.  Those astute chart traders know this.  The projected measurements of this failed H&S pattern was as such. 871.00 The bottom left support line and the head was at 953.00.  Which meant the down price target was 82.00 points below 871.00. now when a pattern as such fails, we don’t throw it in the trash, we recycle it for further use, compression never escapes it just goes somewhere else. in this particular case we add the 82.00 to the top (head) which is 1035.00. This is how compression moves. Measure all of your failed H&S patterns and guess what. It works every time.

 

GOOD LUCK TRADING

 

“Master Che”