We got the stronger opening we expected, with the market moving up to 1380 in the first few minutes of trading. We warned this rally might be short-lived, and that turned out to be the case. From 1380 the market turned sharply lower, breaking through Friday’s 1370 low, and continuing down until it completed a 5 wave sequence at 1365.38.
From that low, the market spent the middle of the day in a corrective mode, working its way back higher, but not surpassing the earlier 1380 high. The market completed the first phase of the correction at 1371. From there it completed a 5 wave sequence down to 1366.48. Another rally followed, the market completing a 5 wave sequence at 1371 once again, then continuing on until it completed another 5 waves from 1366 at 1376. We believe this to be the third wave a 5 wave correction from 1365.
The remainder of the day was spent moving back down, working on wave 4 of that sequence. In this wave the market dropped to 1369 before moving slightly higher into the close.
It does not appear that we have quite completed wave 4, therefore we expect a slightly lower opening on Tuesday, looking for a wave 4 termination point between 1367 and 1369. From there we look for the market to move higher, as we have yet to complete wave 5 from the 1365 low. We would expect wave 5 to carry the market back to the 1378 level.
Longer term we believe we have completed waves 1 and 2 from the 1388 high, and waves 1 and 2 from 1422. We still anticipate the market moving lower, with our current target remaining at 1330. Should we move above the 1380 high, we would expect the market to continue higher, most likely moving above the 1388 high and completing another 5 wave sequence from the 1357 low. We don’t believe this would carry us above the 1422 high.
No comments:
Post a Comment