As I noted yesterday, the SPX finished a 5 wave sequence down from 1363 Tuesday afternoon at 1357. This morning the market opened higher, continuing the move up from that 1357 low. 1357 would soon prove to be only wave 1 of another sequence down, however, with today’s higher opening completing wave 2. The market quickly fell below 1357, dropping below 1355. The market then rallied to the 1358 resistance level, and fell back once again. After again falling below 1355, the market tried to rally again, but this time only made it to the 1357 resistance level. At that point the market fell sharply, dropping to 1346.45. This completed another 5 wave sequence from the 1363 high. A more robust rally ensued from there, and the SPX rather quickly found itself above 1361, completing a sequence from 1346. Almost as quickly as the market rose, it fell once again to near the previous low, but held above it. The SPX then rose into the close, making it back to 1355.
My outlook yesterday was fairly pessimistic, mostly based on the wave structure from 1363. In the move from that high, to the sequence low of 1357, the impulsive waves 1, 3, and 5, were increasing in length. That usually indicates the move has further to go. That played out today, as the 1357 low did not hold, and the market fell to 1346. The impulsive waves in this sequence were contracting, indicating the move may be nearing an end. The ensuing move higher, from 1346, to 1362, contains expanding waves, and the drop back to 1347 contracting waves. All these structures would indicate the move lower may be at, or near an end, with a move higher imminent.
I currently have this move as wave 4 from 1306.62. Thus far, the correction from 1363 has been 17 points, almost precisely that of wave 2 of this sequence, from 1327, to 1310. In the case of inverted corrective sequences, waves 1, 3, and 5 typically are very similar in length. This opens the possibility of the entire move from 1327.28 forming an inverted corrective wave. If this is the case, we should see another impulsive move higher, followed by another wave down of approximately 17 points.
Near term, a break of 1347 would indicate a further move to the downside, with support clustered between 1326, and 1323. Resistance is still at 1357-1358. If we move above that, I will be watching 1361. If the market moves above that, we should be on our way back up.
Thank you for your interest.
Do you have any plans to teach your theory or parts of it, like how you decide what bumps turn into part of your count? -Bill
ReplyDeleteHi Bill. Thanks for your interest. To be perfectly honest, I haven't given it a great deal of thought. Originally, I started this blog as kind of a "proof of concept", to see if the idea was workable on a real time basis. Eventually, the only way to advance the model, is to have others working on it. At the moment I still feel it is a work in progress, with much left to be learned. I am trying to crystalize what I already have, and make it available in some form. I will give it some more thought,and hopefully have a better answer soon.
ReplyDeleteSteve