r
rINT  from 10/24/2010

It was a ³ho-hummer´ last week, with the market remaining within our primary support and
resistance levels. Overhead resistance points are unchanged, while the first and second levels
supports were moved up slightly. Bulls holding on to length with the hopes that Bernanke can
continue to levitate the market should be mindful of these support levels.

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The market has remained contained within first levels of support and resistance for weeks now--it¶s been a quiet
³grind´ in most respects as Mr. Market has bears in a ³sleeper hold.´ Our 1197 resistance was ³kissed´ early in the
week but it provided the key resistance. First level support, the 23.6% retrace, as been moved up to 1159. Bulls
should regard these support levels, 1159 and 1132, as ³stops´ for any length.

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Notice the way this market is adhering to a very nice--almost perfect--trend channel. This
many ³touch points´ on a channel confirms that the move higher is NOT a natural
³impulsive´ wave. This is a corrective move higher, which is why we have come to the
conclusion that we are likely in a ³terminal´ pattern of some kind.

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r
rINT  from 10/24/2010

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ast week, this upward trend channel was highlighted as being important. The bulls are
starting to run into an ³issue´ here, as the market has been unable to get back to the upper
boundary of the channel. It¶s beginning to spend too much time in the lower boundary. A
break of the heavy dashed blue line should trigger selling that will drop the market back to
the 1159 support level (Slide #2).

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 "#  $
%)&
r
rINT  from 10/24/2010: There¶s been no "$

change in wave count--this remains my best  -5-
interpretation of the waves. We should see a -3-

Wave -4- lower very soon. b

-x-
"'$ -1-
g d
-4-

c "($
e -w-
a -2-
#
c f

d
a

b This continues to be the preferred count. The theory is that we¶re in the midst of a ³terminal´ c-
wave that will conclude the entire (B) wave. This would be a third wave extension in the c-wave.
Under this circumstance, the wave -2- should retrace more deeply than a 61.8% and the wave -3-
should not be much longer than the Wave-1-. This is currently what¶s happening. However, that
theory means that the Wave -3- shouldn¶t move much higher and should finish very shortly. The
subsequent Wave -4- should hold the 1132 zone.

%|&

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 * +|*,-.|/*/0* +|*,-.|/*/0* +|*,-

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rimary
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