Friday's Market 06/08/2012

 

I hope you find this blog useful, and informative. I appreciate any feedback.

According to my model, wave 5 of the move from 1267 began on Wednesday at 1294.96. Wave 5 started with a short wave 1, followed by an inverted corrective wave 2, which took the market to 1311, before completing at 1306. Wave 3 propelled the market to 1329, sparked by a gap opening on Thursday. After completing wave 3, the SPX faltered for the first time since the rally began. The index fell to 1318, rallied to 1325, and then completed a 5 wave sequence at 1312.68. In Thursday’s update, I said that even with a 5 wave sequence completed, there was room for a move lower, with support at 1306-1307. From there I expected one more move to a new rally high. Friday morning the market did open lower, with the SPX moving to 1307.77, and completing another 5 wave sequence from 1329. This completed wave 4 of 5.

The market then began to work its way higher, completing a 5 wave sequence at 1323, with each impulsive wave increasing in length. From there, into the close, the market traded in a narrow range, forming what I believe to be an inverted corrective wave, which terminated at 1324.10, shortly before the close.

I believe we are now in wave 3 of 5 of 5 from 1267. Wave 5 should terminate between 1333, and 1337, with wave 3 reaching above 1329, most likely 1331-1332, a pullback of a point or two, and a final high between 1333 and 1337. With wave 5 completed, a corrective of some sort is due. Should the market fall below 1308 before making a new rally high, I would say 1329 was the wave 5 high.

Over the weekend I will give more detail on why I have targeted 1333-1337, and also what might be expected after reaching that high.

Thank you for your interest and support.