It turned out to be quite an interesting day for the market. The small dip we anticipated at the open never materialized, and although we expected another move higher, the move turned out to be stronger than we envisioned.
The market opened higher, rising above the 1380 level we said would lead to a continuation of the correction from 1357. After moving above 1380, the market paused and dropped back to 1377. It is now apparent that wave4 of the correction from 1357 occurred at 1369.41, shortly before yesterday’s close. The slight rise from there, and then the dip into became wave 1 of the next move higher, and wave 1 of an inverted corrective wave that result in the sharp rise at Tuesday’s open. Although a bit unorthodox, normally wave 4 of an inverted corrective wave would carry beyond wave 2, this wave terminated at 1377.
When the market hit 1384, it completed 5 wave sequences from the 1369 low, and the 1365 low. A short move to 1382 followed, in what would turn out to be another inverted corrective wave from 1384. This wave carried above that level, indicating yet another move higher. This corrective wave took the market to a high of 1391, before completing at 1390. Having finished wave 2 of this sequence, the market then continued higher, completing the 5 wave sequence at 1393.
We believe this to be the completion of wave 3 from the 1357 low, which would indicate we have at least one more move higher to complete the sequence. It would appear that a drop to 1389 would complete a 5 wave sequence from 1393, which we believe would be the end of wave 4 from 1357. One more move to right around 1400 would complete the 5 wave sequence from 1357, and be the point from which we will once again move lower.
Our view that the market made a major top at 1422 and that we are in a corrective sequence from that level remains unchanged.
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