The market started the day to the upside on Tuesday, quickly moving up to 1361.54. Yesterday I thought this move would be wave 3 from Monday’s 1346.65 low, but I was wrong. I missed a small wave from 1347, and this move turned out to be wave 5. The market then turned lower, breaking through the 1357-1358 resistance level, and then moving down close to yesterday’s low. After hitting 1348 the market tried to rally, but could only make it back to 1352 before falling again. The selling continued, pretty much unabated, through the afternoon, until the SPX reached 1336.27. A rally off that low brought the market back to 1342.70 shortly before the close.
The action today, after the morning rise, was somewhat unexpected. This market has not been easy to follow as of late, and today was no exception. Longer term, I see still see a continuation of the uptrend at some point, the only question being when. I mentioned over the weekend that a move down to 1325, or 1313, would actually fit better with longer term projections. At the time I saw this as a low probability, with the expectation of a higher move this week.
The move today looked like a completion of 5 waves from 1346, and then 5 waves down to 1336. This would make three waves from 1375, with wave 5 projecting to 1313. So this move still fits within expectations. As I said before, this market has been difficult to read lately. The market could rally further from today’s low, but I see one more move down as probable. Support is at 1326-1323, and 1315-1313, with a target of 1313.
Resistance is at 1357-1357, and 1367. If the market moves above 1361.54, the market may have completed 5 waves down from 1375, and we may see a continuation of the uptrend.
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