The market opened sharply higher again today, continuing the rally off the 1267 low. This opening move took the SPX to 1329, just as I said to expect. Again as expected the market pulled back to 1318, right within the range I was looking for. The market tried to turn higher, but could only make it to 1325 in a somewhat choppy fashion, quite different from the sharp moves higher we have seen lately. Most of the afternoon was spent in a tight trading range just below 1325, until a sell-off in the final hour took the index to 1313, after which it moved slightly higher into the close.
This afternoon after the market had dipped to 1318, and started to recover, I put out an update saying I expected the final move higher to 1345 to be underway, with a drop below 1318 most likely signaling the end of a 5 wave sequence from 1267. This was based on several factors, which I will elaborate on now. First, today I noticed a possible 5 wave sequence from 1267 on the hourly chart. This sequence does not translate well to shorter term charts, with the sub-waves not breaking down correctly. Even with these issues, I kept this as a possibility. Second, I saw the move from 1329 to 1318 as a 5 wave sequence which I assumed was wave 4 of 5 from 1267. I move below wave 4, usually signals the end of a move.
The sell-off into the close took the market to 1313, and also completes a 5 wave sequence from 1329. This occurred at one of our support levels, and kept the market above our original count wave 4 at 1296. In addition, this still fits within our model as wave 4 of 5. It also keeps the projection of wave 5 at 1345. For these reasons, I am sticking with my original count for the moment, and consider this wave 4 of 5 from 1267.
Short term, I am still expecting one more move higher, with a target above 1333, and most likely 1345. This would satisfy several relationships within our model. It is possible for a move slightly lower, while still keeping this scenario intact. 1306-1307 looks like support, with a move below 1296 meaning 1329 was the completion of the 5 wave sequence from 1267. I view this as an impulsive move so far, and even if 1329 was a 5 wave high, we should still see higher levels.
Thank you for your support.
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