The market opened higher today, quickly moving above the 1323-1326 resistance level to 1327.54. The market then pulled back into that resistance zone to 1323, before moving higher once again. A strong rally off 1323 brought the SPX to almost 1332, and then dropped to 1323. Another rally took the SPX above 1333 and after one more pullback to 1329, rallied to the high of the day at 1334.40. A dip into the close took the market to 1331, before moving higher just before the close.
Yesterday I outlined two scenarios for the market. The first had the SPX completing wave 2 from 1307 Monday at 1309.27. I saw 3, and possibly 4, waves having been completed from 1309, with wave 5 projected to terminate at 1341. The second scenario assumed that 1363 completed a 5 wave sequence from 1267, and the market was headed lower. The most likely count from 1363 would be an inverted corrective wave 2, with an upper limit of about 1329. Today, when the market moved above that level, that count was eliminated, and the first scenario continues to be the most likely in my view.
It appears 4 waves have completed from 1309, wave 1 at 1320, and wave 3 at 1324. Wave 4 completed Wednesday at 1319.62, along with waves 1, and 2 of 5. Today we saw wave 3 at the open, then an inverted corrective wave 4, which terminated at 1328.86. So far, it appears 4 waves have completed from 1328.86. So now I am looking for wave 5, of 5, of 5 from Monday’s 1309 low. I am raising my projection for that wave to 1349, from 1341. This should complete wave 3 from the 1310.51 low.
There is one bearish scenario that suggests a 5 wave sequence being completed at today’s 1334 high. Should the market break below 1328 before making a new high, this count may be in play, and the market could see a sharp decline.
Short term support remains at 1326-1323, and then 1315-1313.
Steve,
ReplyDeleteIf your primary sequence to 1349 completes 5/5/5, what comes next?
Hi wavediver.
DeleteThat would complete wave 3 from 1307. I would the expect a corrective wave 4, and then wave 5 from 1307, which still appears to be at 1393. Right now it looks like wave 4 could be rather steep, possibly back down to 1325-1320, but that could change depending on how the rest of this wave plays out.
Thanks,
Steve
Steven, so can you explain more on the bearish scenario that would play if break 1328 before making a new high? So if today SPX breaks 1328 but hold above 1320-1323, what could be the next move?
ReplyDeleteHi Nick.
DeleteIf we break 1328, a semi-inverted wave 2 from 1363 is most likely, with a target slightly below 1306. If we hold 1325, the 1340 area seems likely.
Thanks,
Steve
Steven, so what do you think when we are at 1306 level? You still look bullish to the market? In my view, the market is heading south and will break 1267 soon. I am confused.
ReplyDeleteHi Nick.
DeleteThis has been a rather confusing market lately. Looks like we never made it to 1306, so my current count remains intact. Still think we go higher. Keeping 1393 as my target.
Steve