Big Wave FLASH REPORTS
CHART-OF-THE-WEEK
I’m Dave Nielsen, President and Founder of Big Wave Advisors, Inc. and author of Big Wave Flash Reports. I hope you find my Chart-of-the-Week a helpful tool in visualizing market trends.
Chart-of-the-week

A couple of important numbers for me. 1007 and 1010.

1007 was an important resistance number for 10 months and once the market broke back above it, the second half of the rally was on.
Second, 1007 is the Fibonacci .382 retracement of the entire March 2009 to April 26th 2010 rally ( 1219 high less 666 low = 553 points. 553 x .382 = 212 points. 1219 less 212 = 1007. Funny how that works!!) So when we put in 1010 as a low in July,, we successfully bounced of the Fibonacci .382 retracement level. Usually the second test of these important retracement levels are very key and a bounce off of it again can lead to significant rallies but a break down through can lead to just as significant declines.


Couple this with the significance of the old 1007 high in 2008 and this 1010 area is a real key one. Also note the head and shoulders pattern as well as the down sloping trend line connecting the Flash Crash low and the 1010 low. It offers a target and price support area in the 930 area if the 1,010 support is taken out.


CONCLUSION
If prices drop below the 1,010 area in the S&P, it will confirm that CIRCLE wave C down has started. It will also confirm that we are in minuet wave 3 of minor wave (1). Remember, major CIRCLE wave C will be made up of 5 minor waves and these 5 waves will also break down into 5 smaller waves.. Minor wave (1) will be made up of 5 smaller waves and a break of 1,010 will confirm that minuet wave 3 is in progress. This minuet wave 3 downside target is in the 930 area.


Once there, minor wave (1) will have completed 3 waves and the market will be ready to rally in corrective minuet wave 4 back up. By the time we have finished this first minor wave (1) down, we should be near the 800 level on the S&P 500.
But let’s not get ahead of ourselves. The first move to look for is a move under 1,010 and the move down to the 930 area.

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