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The market opened sharply higher today, reaching our 1294-1296 wave 3 forecast within minutes. After a very slight wave 4 pullback, the SPX rose again, hitting 1303.53. From that point, an inverted corrective wave occurred, lifting the market to 1311, before we finally saw a real move lower. Even this pullback was minor, dropping the index slightly more than five points, before the corrective wave ended at 1305.78. The rally continued from there, with the market rising steadily, closing at the high of the day at 1314.53.
Yesterday I said I expected this wave to reach 1320, and now I think it can move even higher. I believe the market is in wave 5 from the 1267 low, but this wave 5 may push the index quite a bit higher before it’s over. From the 4 completed waves, wave 5 projects above 1333. Using wave 3, one of my secondary relationships points to 1345 as the high. From what has completed of wave 5, it appears we could see a move to 1324, followed by a slight pullback, and then a final move above 1333, with 1356 being the optimum target.
These types of waves lend themselves to very large target ranges, and although they usually terminate in the lower end of that range, there is the possibility that this wave could carry substantially higher than the optimum.
If this wave plays out as I think, it should terminate between 1333 and 1345. I see resistance around 1338. If we move below 1306 at this point, the move from 1267 would most likely be over, and I would look for a further pullback.
Longer term, this wave thus far has appeared to be impulsive. As we mentioned in our Weekend Outlook, the DJIA appears to have completed a semi-inverted corrective wave, which would be bullish for the market.
Thank you for your support.
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