The market opened higher today, continuing the rally from Monday. The SPX hit 1320 within the first fifteen minutes, and then started to sell-off. First, the market fell back to the 1315-1313 support area. After trying to bounce off 1313, the market broke below that support, falling back to 1310. The market found some buyers at that point, breaking back above 1315. From there, the market rallied again, making it back to 1320, and then finding its way to 1323-1324 resistance area. After hitting its high at 1324, the market bounced between 1320 and 1324 into the close, closing near the bottom of that range.
The opening move higher completed a 5 wave sequence from Monday’s 1309 low. Wave 2 then completed at the day’s low of 1310. Another 5 wave sequence completed at 1324, completing 2 waves from Monday’s low. It is possible that wave 4 completed at 1319, with a lesser degree wave 1, and 2 finishing the day.
If this count is correct, wave 5 should terminate above 1340. Both the 5 wave sequence from 1309 and the sub-wave sequence from today’s wave 2, on the 60 minute chart. This scenario would remain intact unless wave 4 carries below the 1313 support level.
The above scenario assumes my current count is correct. That count is wave 1 from 1267 completing at 1336, wave 2 1307, and wave 3 from 1267 underway. Thus far from 1307, I have wave 1 of 3 completing at 1327, and a semi-inverted corrective wave 2 terminating Monday at 1309. This still seems to be the best count, as I still have trouble discerning 5 waves up from 1267.
Although I do not see a 5 wave sequence from 1267, it is possible that it has occurred. The move down from 1363 can also be seen as a wave 1 to 1346, and an inverted corrective wave 2 in progress. Under that scenario, the market would currently be in wave 5 of that sequence. The upper limit for this scenario is a wave 5 high of 1329. A move above that level would nullify that count, with my first scenario remaining intact. Should this inverted corrective wave scenario turn out to be correct, I would expect to see waves 3, 4, and 5 to the downside. This move could be rather sharp, and could carry the market down to the 1297, or 1290 support level. This would not, in my view, necessarily mean the market would move below 1267. It is entirely possible that this would be wave 2 from 1267.
Short-term, I look for a move above 1329, to result in wave 5 terminating above 1340. A move below 1310 would most likely see the market moving down to 1297, or 1290. Support remains at 1315-1313, with resistance still at 1323-1326.
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