SP500 Nears Short Term 5:5 Sell Signal off January 31 Low

There are 5 distinct wave off the January 30 low. Wave 1 was the big upthrust off a better than expected February 1 ISM and end of January rally. Wave 3 was smaller than Wave 1 and crested the day after Merger Monday on February 7. Wave 5 got a boost from Michigan Sentiment and Mubarak's resignation in Egypt. Wave 5 is cresting on Tuesday and Wednesday of this week after Merger Monday on Feb 14. Wave 5 is still significantly smaller than Wave 3, which is as it has to be because Wave 3 can never be the smallest wave. Wave 5 would have to extend beyond 1340 to exceed Wave 3 to invalidate this count.

The initial sell signal on the point and figure chart below will be a print of 1329.00 which should occur after the initial thrust of buy orders subside after the opening bell. A second sell signal will be a print of 1322.00 just below Tuesday Feb 15's wave 4:5 low. The failure of Tuesday's Wave 4:5 low will coincide with the breaking of the trend support off the Jan 30 low. This is important to note because a break of both of these supports should be accompanied with a release of selling pressure targeting the one month average at 1298-1300. This release of selling pressure may or may not occur today, but beware last week was a high close at 1327 and thus far this week the mkt is having difficulty sustaining a trade above it as it finishes off a minuette wave 5:5.