S&P 500 (60 min.) - A Triangle Forming off the Lows?

(Z)
“c”
1050
This model is up against the wall today. This market must peak and reverse very soon. The main target remaining
is 1098, for a 161.8% of (a)=(c). Classic chart resistance is at 1105, so the resistance zone is clearly defined
between 1098 and 1105. If that zone gives way, then this market could retest the highs of 1050.

(x)
(a)
(w)
[c]
1104.7 (c)?
[b] [c]
(x)
-x-
(e)
[a]
[a]
[b] [.d]
[.b]
(y)
[a]

1071.6 [.e] (d)?

(z) [b]

Target for the (c) wave: -w-

1098 = 161.8% of (a) [.c]
[.a]

1044.5
[c]
(b)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 (60 min.) - An Expanding Triangle?
(Z)
“c”
1050 If 1098 gets decisively taken out, then the next best interpretation would be an “expanding” triangle of some kind. One of
the key characteristics of “expanding” triangles is the severe whipsaw nature of them. These patterns CRUCIFY traders!
The e-wave of an expanding triangle is the largest and most powerful wave. After an expanding triangle completes, the
[b]
next wave down will develop very slowly. This pattern would suggest an extremely difficult trading environment for the
next several weeks.
-b-
(e)
[a]

(x)
[c]
(w) (c)
[b]
(a)

[a]
[.d]
[c] [.b]
(y)
[a]
-a-
[.e]
(b) [b]

[.c]
There are no Fibonacci relationships in an [.a]
expanding triangle, so there is no good way to
target an e-wave conclusion, unfortunately.

(d)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 (60 min.) - “Forcing a Five”
(Z)
“c”
1050 On my Weekend report on the S&P, I came up with this sort of count to “force” a five wave move down from the highs. Lo’
and behold there are now some traditional (and popular) wave counters who have abandoned previous “five wave”
-2- models in lieu of this particular theory. As noted yesterday, there are some flaws with this model. The biggest being the
fact there is no “extended wave.” There are other wave counters attempting to label the action in the box an “irregular”
correction of some kind with the initial wave-1 concluded at 1071.6. The main issue with that idea is the current wave up
does not look impulsive at all, therefore it’s impossible to classify this as an “expanded flat.”

(2)
-1-

(1) -4-
1104.7

(4)

(3)

1071.6
(5)
-3-
Target for the (c) wave:
1098 = 161.8% of (a)

1044.5
-5-
1

Andy’s Technical Commentary__________________________________________________________________________________________________

 Dollar Index (Weekly)
So far this “d” wave is moving higher in a way that was expected. I did not
“b” anticipate an “impulse” off the lows because this was supposed to be a
89.62
corrective “d” -wave. The “b” wave was abbreviated at 11 weeks, so this
(A) “d” should last a bit longer than it currently has run (at 11 weeks right now).
This is why I’m favoring an x-wave development from the recent highs.

“d”
Z
81.70 or 83.71?

x y

w
x
w x
77.69
“a” x “e”
y (B)

74.33
z of “c”

Andy’s Technical Commentary__________________________________________________________________________________________________

 This has been my model for several months now and so far there is nothing to suggest
Dollar Index (Weekly) anything different. The “b”-wave lasted 54 trading days, so an 80+ day “d” wave might be
nice “alternation.” So far, we’re only half way there, so perhaps this “d” wave persists until
early April. The minimum objective of this pattern would be 81.70, for 61.8% of “b.” A
decisive break of 81.70 would open the door to 83.71, the 78.6% of “b” target. Interestingly,
“b” the 61.8% retrace of “c” comes in at 83.78, so we may not see any strong selling until 83.70’s
89.62

(A)

REPRINTED 2/7/2010

“d”
Z
81.70 or 83.71?

y
x

w
x
x
w
77.69 “e”
“a” x (B)
y

74.33
z of “c”

There is compelling evidence that we’re in the tail end of a triangle (B)-Wave. The “a”-wave was an “elongated
flat.” These patterns exclusively show up as legs in a triangle. The “c”-wave is VERY difficult to classify as a “five,”
therefore it must be a correction, which supports a triangle idea. Lastly, the “c” was almost exactly 138.2% of “a”-
wave, which is a nice Fibonacci relationship required in a triangle.

Andy’s Technical Commentary__________________________________________________________________________________________________

 y
-g-
Dollar Index (180 minute) ~ “Unorthodox model” -e-
80.75

-c-

-f- 79.53
w -a-
-c-
78.45
78.68
-d- x2?

-b-

76.94

-a- x1
-b-
It seems as though the “diametric” model has done a good job of predicting the end of the of the wave up from
76.94. As noted on the previous slide, my bias is for an x-wave development from here. On several occasions
I’ve mentioned the idea that waves moving in the same direction, and of the same degree, often relate by a
Fibonacci factor. This includes waves moving in opposition to the prevailing trend. With that in mind, the
following levels might be targets of the next decline:
79.24: 100.0% of x1=x2
78.66: 138.2% of x1=x2 (look how well that aligns with previous chart support)
78.31: 161.8% of x1=x2 (look how well that aligns with the W-Wave peak of 78.45)

Andy’s Technical Commentary__________________________________________________________________________________________________

 y?
Dollar Index (180 minute) ~ “Unorthodox model” -e- -g-

REPRINTED 2/15/2010
-c-
79.53
-f-
x?
w -a-
-c- 78.68
-d-

-b-

76.94

-a- x

-b- The Dollar Index seems to be nearing a completed wave count from 76.94 and may be running
out of a steam in the short term. The dashed blue uptrend line could be important support for
any correction, but the 78.68 line seems even more critical for bulls to hold. I’m bullish this
market longer term, but must accept the fact that the DXY seems due for a pullback. “Tighter”
traders may want to consider 79.53 for “stop loss” strategies on long positions….

Andy’s Technical Commentary__________________________________________________________________________________________________

 British Pound (180 min.)

Last weekend, we highlighted the extreme bearish sentiment facing the British Pound--speculators are
very short this currency. As if on cue, the Sterling is staging a small rally. The 23.6% retrace of the
decline from 1.6874 comes in a 1.5848, which aligns with prior support/resistance. A break of 1.5848
should send the Sterling to the high 1.600’s…….

I thought this was a triangle that would set

up one more leg lower. Instead, it looks
like a triangle that finished a move. 1.5623
now becomes key support for anyone who
might be bullish the Sterling.

Andy’s Technical Commentary__________________________________________________________________________________________________

 British Pound (180 min.)

If you’re convinced of the bearish case for the Sterling and believe that the U.K. is the “next Iceland,” then
shorting this currency probably seems like a worthwhile endeavor. The key, at this point, is to realize that
you’re running with the big herds. So, it’ll be important to understand the various levels that “should” serve
as resistance. In this case, 1.5848 and 1.6101 look like first and second levels of resistance for the next
few weeks. Breaks of these levels should trigger larger short covering rallies that could become violent.

This looks like a triangle pattern that

should lead to one more leg lower.

REPRINTED 2/13/2010

Andy’s Technical Commentary__________________________________________________________________________________________________

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