The move yesterday from 1323 to 1333 would now appear to have been waves 1, 2, and 3, of an inverted corrective wave from 1323.40. Wave 4 come this morning in the sharp move lower at the open, with the small rise to 1318 completing wave 5, and wave 2 from 1335. The drop to 1311 formed wave 3, the rally to 1318 wave 4, and the day’s final decline to 1311 completed wave 5.
We now have a 5 wave sequence completed from 1292 to 1335, and a 5 wave sequence from 1335 to today’s low of 1311, leaving us again without a clear cut answer as to which way the market will head next. With the completion of a 5 wave sequence today, we would expect a move higher, with an initial target of 1320. Before we can even think about the resumption of a rally, we would need to see a price above yesterday’s 1335 high.
We believe this market still needs to work lower before a rally attempt can occur. A move below 1311, in our opinion, would signal the start of that move lower. We see support at the 1301-1302 level, with resistance at 1327, and 1333.
The Asian markets got hammered tonight, and the European futures are deep in the red yet again. Very ugly.
ReplyDeleteHi Vinnie,
ReplyDeleteAgreed. I think this market is going lower, and I think we'll make new lows. With the completion of the 5 wave sequence today, a small bounce to 1320 would be reasonable. Seems as soon as people get bullish, this market collapses, when everyone's expecting the other shoe to drop, the market goes up. I think everyone's waiting for the other shoe to drop. A small rally would calm the crowd, and set up the next move down. But I certainly wouldn't be bullish in any respect at the moment.
Steve
I fully expected a relief rally of some magnitude, and will hold out till this Monday for the direction. We've been washed out to SPX 1300 so many times, I can't count anymore, and when oversold Oscillators reach -4000, a reading never achieved before, one spark could set off a short covering rally of 300-400 DOW points. VIX at 25, is dangerously high for a move in either direction.
ReplyDeleteI look for this move to carry down to 1297. That should complete Wave 3 from 1335. We might see a rally from there, but we should see one more move down after that.
ReplyDeleteSteve
SPX hit your target almost exactly already at 1298 earlier this morning. I would assume that fulfills your target requirement, merely a 1 point difference.
ReplyDeleteIt does. However, if that holds, it looks like we would need to rally back to around 1313, then come back down to back a very slightly lower low to complete the 5 wave sequence from 1335. If we come back to hit 1297, the scenario is a bit different.
ReplyDeleteSteve