The market continued yesterday’s strong move to the upside at the opening this morning. Within the first half hour the SPX hit what would prove to be the high for the day at 1419.15. From there the market worked its way lower to 1415 where it found some support. Failing to hit a new intraday high, the market made it to 1418, and then moved down once again to the 1415 level. The market tried one more time to move higher, but as it neared 1418 for the second time, it once again reversed course. This time the market came under some selling pressure, breaking through 1415. The selling accelerated into the close, with the index closing the day at 1412.52, slightly off its low of 1411.92.
Yesterday we said it appeared the index was forming an inverted corrective wave from the 1399 high, and that we were watching the 1421 level, as that would complete a 5 wave sequence from the 666 low. As it turned out, the SPX actually formed a straight forward 5 wave sequence from the 1387 low. The 5 waves turned out to be 1387-1399, 1399-1397, 1397-1409, 1409-1408, and 1408-1419. This yielded a model value of .9965, well above our .99 threshold.
While we set our target at 1421, that was the high end of our range. The 1419.35 high gives a model value of .9962. It would appear at this point that 1419 completes a 5 wave sequence from the 666 low.
From today’s high of 1419.35, the market completed a 5 wave sequence 1411.92. The expectation now would be to see a rebound from that level. Should we fail to get above 1419, and then break 1412, we would be headed for another sequence down.
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