Well, I couldn’t have been more wrong the last two days. I was expecting the market to move higher, to 1397-1398, and instead the market has undergone a substantial sell-off. Although I have apparently misread several waves during this sequence, I still believe the market may stage a rally to 1395 that would complete wave 3 from 1367.
On Monday, the market opened sharply lower, dropping to 1338 before rallying in the afternoon. This rally took the SPX back near the 1357-1357 resistance level, reaching 1353. The sell-off continued into today, with the market moving lower, down to 1340, during the morning. After a small rally attempt to 1345, the market headed lower again. The market paused momentarily after moving below 1332, the SPX put in the low of the day at 1329.24. This level was close to the 1323-1326 support level, and above the previous 1325.41 low I have labeled as wave 2 of 3 from 1267.
From the recent uptrend high of 1380.39, the market has completed a 5 wave sequence at today’s low of 1329.24. This sequence contained an inverted corrective wave 2, which accounted for most of the damage the last two days.
The market is again at a critical level. If it can hold above the 1325.41 low, it still appears that the market is in wave 3 from 1267. The entire move from 1325 to 1380 can be seen as wave 3 of 3, and the move to 1329 wave 4. Given this count, wave 5 still projects into the 1393 level I have been targeting for this wave.
Since I have been wrong several times during this wave, I have gone back and tried to look at as many possibilities as I can. Looking at all these possibilities, there is a count that would make 1380 the termination point of wave 5 from 1267. This sequence would be 1363.46-1309.27-1374.81-1325.41-1380.39. I still don’t see 1267 to 1363.46 as a 5 wave sequence, as it must be for this count, but since this entire sequence has been difficult to identify, I will keep that as a possibility. If the market breaks below 1325.41, this would seem the most likely scenario.
The market is currently right at the 1338 support/resistance line. Resistance is now at 1357-1358, 1367, and then 1387-1397. Support is at 1323-1326, and then 1313-1315.
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