Last week we said we were within the target range for the termination of a 5 wave sequence from 1422. On Friday we said it looked like we had completed another 5 wave sequence at 1291.98, and we could see a rally from that point. Over the weekend we said we could see a rally, possibly to the 1323 area. This morning, on Stocktwits, we said a move above 1300 could trigger a rally.
1300 was the termination point of the last wave 4. A move above that level would signal a termination of the current wave, and the 5 wave sequence from 1422. The market opened higher today, initially reaching 1301.02, before pulling back slightly. From there the market moved sharply higher, completing the first 5 wave sequence from 1292 at 1308. After another small pullback the market turned higher again, completing another sequence from 1292 at 1312, and what appears to be another at the close, at 1316.39.
It now appears that the 5 wave sequence from 1422 is over, and the question now becomes what next? Short term we believe a 5 wave sequence has completed from 1292. We would expect a pullback at this point, with a move below 1314 confirming the completion of the wave. If the market moves higher from there, another 5 wave sequence to the upside would be unfolding. We still look at the 1323 level as resistance, and a move above that could mean this is more than a short correction, and we could move significantly higher. A move below1292 at this point would make this wave 2 of another sequence down from 1422.
With the completion of the 5 wave sequence from 1422 at hand, there are several possibilities to consider. The first possibility would be that the correction from 1422 is over, and we are entering a new bullish trend. Since we still view 1422 as a 5 wave high from 667, this wave still seems rather small comparatively, making this unlikely, but possible. The second possibility is that the drop to 1292 was merely wave 1 of a 5 wave corrective sequence, and this is wave 2. If the market moves below1292, this would be the most likely scenario. The next possibility is that the move was wave 1 of a more complex corrective sequence, either an inverted, or semi-inverted corrective wave. If this is a semi inverted corrective wave, wave 2 should take us above 1422, and wave 3 back below 1422, but terminating above 1292. Wave 4 would end below 1422, and wave 5 would take us below 1292. An inverted corrective wave would see waves 2 and 4 as impulsive looking waves higher, with waves 3, and 5 being short corrective sequences. Normally this would take the market to much higher levels.
At the moment we cannot determine which of these outcomes will actually transpire; we can only keep these in mind as the wave unfolds.
No comments:
Post a Comment