It was another down day for the market, as the sell-off from Tuesday’s high continued. The market gapped to the downside, very quickly reaching the 1356 level I mentioned yesterday as the initial downside target. After a brief pause, the selling continued. When the market hit 1349, it tried to rally, but that was brief. After moving up to 1353, the market dropped to the low of the day at 1348.03. The market then rallied to the close, making back right to the 1356 level.
The sell-off from Tuesday’s 1374.81 high is best seen as a 5 wave sequence to 1348.03. The drop to 1363 on Thursday was wave 1, followed by an inverted corrective wave 2, and then waves 3, 4, and 5 bringing the market to 1348. The afternoon rally carried the market back above the wave 4 high of 1353.11, which could be a positive going into Monday.
It now appears that the wave 3 high from 1306.62 occurred at 1374.81, and not at 1365.35. Although it appears likely the market will continue to rally on Monday, a further correction would fit the model better. It is possible that a different wave structure has been unfolding since 1336 high from 1267. For now I am still looking at 1393 or 1475 as targets for wave 3 from 1267. Support is at 1338, 1326-1323, and then 1315-1313. Resistance remains at 1356-1359, 1367, and 1393.
I will address this in more detail over the weekend.
Steven, regarding you said a further move lower would fit your model, are you looking for a further move lower than Friday's low? Do you think Friday's move is the wave 4 of wave 3?
ReplyDeleteHi Nick.
DeleteA further decline would my model better given my current count. I think it is more likely that the market is forming a more complex corrective wave, and the decline into Friday could be the end. Yes, I see that as wave 4.
Thanks,
Steve