Thursday’s late afternoon once again turned out to be another one of the market’s head fakes. After opening slightly higher and completing wave 5 from 1311. This turned into wave 1 of a larger sequence, and after a small pullback the SPX completed waves 3, 4, and 5 rather quickly, taking the market to 1324.20. The rest of the day was spent working lower, with a series of moves up and down; looking again like a double inverted corrective wave is forming. A clear 5 wave sequence was formed from 1323-1314, right near the 1315 support we pointed to yesterday. From there the market staged a small rally into the close.
We feel this morning’s move to 1324.20 may have great significance. Although very odd looking, it comes within .01 points of completing a 5 wave sequence from 1292. Given the bearish formation we see forming from 1324, it has become a distinct possibility. At the moment this only means that we are in a corrective wave, and doesn’t necessarily mean we will break below 1292. As we have already identified 1292 as a wave 5, the move to 1324 could have been wave 1 of a move higher, with the market now in wave 2.
We still feel this market could eventually break out in either direction, but we see at least one more move to the downside on Tuesday. A move above the 1324-1328 level would signal a breakout to the upside.
Does today's 50% retracement from the 150 point move up, count as the 1 wave lower you spoke about before we continue higher?
ReplyDeleteHi Vinnie. This looks like it may be an inverted corrective wave from 1324. 1324-1315 W1, pop this morning W2, drop to 1323 W3. Would expect another large upside move for W4, and 10 point drop for W5. If we fall below 1323 I'd be leery.
ReplyDeleteThanks,
Steve
Vinnie,
ReplyDeleteThe inverted corrective wave scenario is not looking right. Looks like we completed a 5 wave sequence from 1292 at the 1335 high today. Looking more like a false breakout at the moment. I'm not sure the big rally a lot of people have been looking for is going to materialize. At least not at the moment.
Steve