The nearly uninterrupted, two month run-up in the market is about to come to an end. According to our 5 Wave Model, this is the last stage of the 5 wave sequence which began last October with the S&P500 at 1074.77. Although this wave has proven quite intricate, it has unfolded perfectly. More importantly our model indicates that this also completes a 5 wave sequence from the March 2009 lows of 666.79.
From the 666.79 low on the S&P500, the Wave 1 impulse wave terminated at 1219.80. This wave corrected in a 5 wave sequence down to 1010.91. This was Wave 2. Wave 3 carried the market to a high of 1370.58. Wave 4 ended at 1074.77. After Wave 4 our model forecasted a Wave 5 high between 1378.79, and 1421.75, with a target of 1398.60. With only the last few waves left to be resolved from the sequence beginning in March 2009, it now appears Wave 5 will terminate at the lower end of the range. There will be one more push higher, moving the market above 1378.79, and then the markets will enter a 5 wave corrective phase.
It is too early to forecast a price for this phase, or even what form it may take. It is possible that this corrective wave will be an inverted wave, which would allow the market to move higher. For now expect the market to move lower after one final high, and wait for the market to reveal the next wave structure.
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