In my view, today’s action was a little curious, and in the end, possibly very interesting. Having put in wave 5 from 1422 at 1267, I was looking for a move above 1282.55 to confirm, and then a move to 1285, or 1294. This would complete wave 3 from 1267. After a lower opening, the market did move past 1283, confirming the 1267 low, and continued higher to 1285. However, the move from yesterday’s 1273 wave 2 low, to 1285, does not appear to be a 5 wave sequence. The market then sold off, moving back down to 1278. For the rest of the day, the SPX moved steadily higher, moving above 1287 shortly before the close.
While the market did move higher today, it did so in a rather subdued manner. Given the wave structure moving down to 1267, I was looking for a sharper move.
The move from 1267 to 1280 was a clearly defined 5 wave structure, as was the decline back to 1273. If the 1285 level proves to have been wave 3 from 1267, wave 5 would project just slightly higher than today’s high. A I said before, the move to 1285 does not seem to be a 5 wave structure, but more likely 3 waves so far. Similarly, the move from the following low at 1278 has not yet completed 5 waves. If we take the move from 1273 to 1285 as 3 waves, and 1278 as wave 4, wave 5 projects to 1296. The wave structure thus far from 1278 started with 2 strong impulse waves, and using those waves we can project a wave 5 termination point at 1294-1296.
We now have three separate projections pointing to 1294-1296, and this seems like the most likely wave 3 termination point from 1267, with waves 4, and 5 left after that. This would be a pretty short term bullish outlook, with wave 5 projecting somewhere around 1320.
If 1285 was wave 3, we should be close to a wave 5 top. With the diminishing wave lengths of 1, 3, and, 5, this would be a more bearish scenario, and would likely mean at least one more low below 1267. A move below 1278 would make this scenario most likely.
At the moment, I see the first scenario as the most likely, and if so, we should see sharper moves higher, with a move above 1290 most likely confirming this.
Possible big open this morning. Where do you see wave 4 in your first scenario?
ReplyDeleteWaves 2, and 4 are the most difficult to forecast. I would expect a fairly shallow move. Support in low 1290's - high 1280's, then 1278 and 1275. Depends somewhat on where wave 5 terminates.
ReplyDeleteThanks,
Steve
Steve, what do you think after wave 5 completes at 1320 as you said? More, under my understanding of wave theory, there are only 3 waves, namely a,b,c, for corrective waves, but why do you count every wave in 5 sub-wave patterns? Could you tell me the reason behind?
ReplyDeleteHi Jeff. I now think this wave will move even higher, with 1345 my new target. While my model is based on waves, it is not based on Elliot Wave Theory. I believe each wave, whether impulsive or corrective, breaks down into 5 sub-waves. My wave relationships depend on 5 waves. Too early to be positive about what is next, but this wave looks bullish. I'll have more details in tonight's update.
DeleteThanks,
Steve
Steve, you know we have discussed this potential move up, which was a very minority view by most, and a reality at market close. No one is happier than me, I stuck to my guns. I still think we climb higher to as high as SPX 1360 in a few days, and then turn back down below SPX 1267 for a low target of SPX 1190. Since you were one of the few to call a real possibility to a move to 1320, and we got very close today, how does your model look now on a timetable reference to June 30th?
ReplyDeleteAlso...You see how you have three numbered waves that hit between SPX 1340 and 1357?, well in whatever terms you use in EW, you'll see my take about top range 1363 is not far fetched. I'm using price/volume/TRIN/VIX on 10 minute/hourly/daily to get to my target(s). Todays A/D line was the best since 12/20 of last year!
ReplyDeleteHi Vinnie. I'm glad you stuck it out. It was dicey for awhile, but I assume you were well rewarded. I agree with your view that we will exceed my original 1320 target, as I now see 1345 as the optimum. Your call of a move lower after this is one of my scenarios, with 1180+/- my target. I am beginning to see that as a low probability, mostly based on what I see in the DJIA. The formation I see there is a semi-inverted corrective wave, which is bullish. That's what I am watching now for direction. Sorry, my model doesn't give time frames, but I am working on that. :).
DeleteThanks,
Steve
And congrats again. Nice trade.