(B)

S&P 500 ~ Daily with RSI “y”

c
-5-
REPRINTED from 11/7/2010 -3-?
a

-1-
“w” -4-

“x”
-2-
b

Notice how the RSI has “pegged” out on the Dailies. This is some evidence that what we
are witnessing is a “third wave” within a c-Wave, which is itself a ‘third wave’ of sorts. The
new high on the RSI is evidence that we’ll likely see higher highs because it’s pretty rare
for a market to peak in a major way WITHOUT RSI Divergence. In other words, this is a
picture of a market that is bound to congest/correct very soon in order to relieve the
“overbought” RSI condition. But, it’s also a market likely to set a new high in order to
achieve RSI Divergence.

(A)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 ~ Daily with RSI (B)
“y”
c
-5-
a -3-

“w” -1-
-4-

“x”
-2-

The market has done a good job of working off the extreme overbought conditions
from two weeks ago. The wave count suggests several weeks of sideways/lower
congestion before we get a a new high (Wave -5-). If this count is correct, we
should see a triangle Wave -4- that lasts until the end of the year.

(A)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 ~ Daily: Support and Resistance REPRINTED from 11/7/2010

-3-

S&P “snapped” previous resistance at 1197 and “pivoted” to the next resistance point
at 1220. At this moment, there are two tightly packed resistance points: 1239 and
1250. The first level is the 161.8% of -1- = -3- target. The 1250 level would be the
target of the Head and Shoulders pattern identified several weeks ago.

Neckline -1-

First and second levels of support are 1183

and 1158 now. 1183 is the 23.6%
retracement and a level that aligns with the
lows of the FedReserve meeting. 1158 is
classic support and is very close to the 38.2%
retracement.

Left Shoulder -2-

Right Shoulder

Head

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 ~ Daily: Weekly Support and Resistance
The wave count suggests several weeks of corrective sideways/lower price action. I’m expecting
the S&P 500 to be rangebound throughout the rest of the year. 1207 and 1219 look like first and
second level resistance for the week. 1207 is the 61.8% retrace of the most recent down move and -3-
1219 would be an 85% retrace, something that we might expect if this is a triangle.

(a)?

-1-

Last week’s low of 1173 becomes first level

of support while 1158 remains our second
level of support, which is unchanged for the
last few weeks. Mega support would be
1130. A breakdown below 1130 would kill
this wave model.

-2-

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 ~ 180 min. Cash -3-
(5)
1227

(3)

(4)
(a)
(1)

(2)

This would be a closer look at the last Wave -3- higher and the current decline. The wave -3- is
certainly not the best example of a “first wave extension” impulse. Also, there are certain other
issues with counting this whole progression as an “impulse.” The most glaring issue would be the
Wave (3), which looks more corrective than impulsive. However, when one stands back and blurs
the eyes, five waves can be counted here. The wave (3) was 50% of (1) and the Wave (5) was
78.6% of (3), which are ratios consistent with a “first wave extension” impulse.

The above notes are more “academic” in nature and are merely ideas that must be considered if the
waves start behaving in unexpected ways. The most important thing to note is that “something”
finished at 1227 and it’s highly likely we’re in the beginning stages of a corrective phase.
-2-

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 December Futures ~ 60 min
-3-
(5) It’s tough to get ‘granularity’ on the 60 min cash chart, so here’s a look at the Dec S&P futures from
the highs. It’s very difficult to see an “impulse” lower, therefore it must be a correction of some kind.
This would be best representation of the count working lower. What should follow here would be a
wave (b) that ‘should’ retrace 60-80% of the prior movement. Essentially, the S&P futures ‘should’
move back to the 1203-1214 zone basis this wave count.

[.b]

[x]
[.a]

[.b]
[.c]
[w] [.a]

[.c]
[y]
(a)

Andy’s Technical Commentary__________________________________________________________________________________________________

 Gold Daily (Dec Futures) REPRINTED from 11/7/2010

Previous wave counts had the (D) wave ending too early. Based on the way (E)
the market has progressed, the corrective wave we’re labeling (D) must have
concluded at the 1159 low. Unfortunately, the current wave is taking on an
“unrecognizable” shape.

“x”
w y
-c-
(C)
x

w
b -a-
x
d
1159
y ( E ) Wave Targets:
-b- “z”
(D) $1,428 for (E) = 50% of (C)
$1,492 for (E) = 62% of (C)
a e
“w”
c

Andy’s Technical Commentary__________________________________________________________________________________________________

 Gold Daily (Dec Futures)
( E )?
Gold came within $4/oz of hitting one of the (E) wave 1424
targets before reversing violently. The steepness and
sharpness of the decline highly suggest that we’re in
the beginning stages of at least a short to medium Left Right
Shoulder? Shoulder?
term decline. From a sentiment perspective, it would
make sense that gold reached some sort of peak into
QE2 and European Union “troubles.”

tern??
lder pat
nd Shou
sip ien t Head a
In

( E ) Wave Targets:

$1,428 for (E) = 50% of (C)

$1,492 for (E) = 62% of (C)
1159
y
“z”
(D)
Andy’s Technical Commentary__________________________________________________________________________________________________
 Gold 60 min. (Dec Futures)
Gold bears can make an argument that the move lower was an “impulsive wave.”.
While that’s ‘possible,’ a “double zig-zag” count lower seems to fit better.
1363 and 1377 should be considered first and second levels of resistance for
[b] bears/shorts. Alternatively, those looking for a “bounce back” should consider
1341 and 1329 first and second levels of support. It should be noted, though,
[.2] that under this model, the -b- wave in Gold should take the yellow metal back to
the 1390-1405 zone. B-waves following corrective moves typically retrace 60-
80% of the prior move.

[.4]
[.1]

[.3] (x)
[a]

[b]

[.5]
[c] [a]
(w)

[c]
(y)
-a-

Andy’s Technical Commentary__________________________________________________________________________________________________

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