One of the scenarios I mentioned yesterday had wave 3 from 1336 terminating near 1306, with wave 5 ending slightly below that. I said if that scenario played out, the correction from 1336 was most likely over.
The market opened higher today, moving up to our resistance line at 1316. The market turned lower from there, moving slightly below yesterday’s low, bouncing slightly, and then making another slightly lower low at 1306.62. At that point the market rallied sharply, rising swiftly to 1320.75. The mid-day hours were spent in a fairly narrow trading range, bounded by our 1318, and 1316 support/resistance lines. Nearing the last hour of trading, the SPX broke above 1318 once again, bounced off of it twice, then rallied into the close. This last rally carried the market above 1324. This 1324 level has been a persistent point of support, and resistance since before the 1267 low. It is interesting that it has appeared once again. Perhaps this time the market will put that level behind it for awhile.
The action this morning, in my view, was the completion of a 5 wave sequence from 1336, and the end of the correction phase from that point. It appears the market has completed 4 waves up from 1307, with wave 5 expected to terminate between 1329, and 1333.
That should complete a 5 wave sequence from 1307, but I believe the market is headed to the upside. To the downside, the 1307 level is significant. Should the market fall below that level, the correction from 1336 could continue.
Thank you for your interest.
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