After Thursday’s close we stated that we had completed a 5 wave corrective sequence from the 1357 low, and that we were now expecting another move to the downside starting on Friday. The market did sell off at the open, quickly moving down to 1383. From the 1388.13 high on Thursday, wave 1 was the drop to 1387. The market then formed an inverted corrective wave that started on Thursday, and then carried over to Friday’s market. This inverted corrective wave ended at 1383, and from there the market moved lower once again. When the SPX hit 1380.12, a 5 wave sequence from the 1388 high was completed.
After a quick run up to 1383, the market turned lower again, breaking through the 1380 level and signaling another 5 wave sequence to the downside. The market finally found some support at 1373, and that marked the termination of wave 3 from the 1388 high. The market then spent the next several hours in a corrective sequence, finally topping out at 1379.
From there, the market moved lower once more, hitting 1375, finding some short term support, and then breaking through the previous low of 1373. The market continued lower into the close, hitting a low of 1369.85, before closing just above that level.
From the 1379 high, the market appears to have formed 4 waves, and is currently in the fifth. It is also just tenths of a point above a level that would complete a 5 wave sequence from 1388. We could see a small bounce on Monday, but we believe this would only be a temporary pause to the downside move. This would appear to be a wave 1 of another 5 wave sequence down from the 1422 high. We continue to believe that the market will work lower, to at least the low 1300’s.
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