After opening slightly higher, the market moved down to 1358.96. From that point the market staged a pretty powerful rally, moving above the previous uptrend high of 1374.81, making it to 1375.26. The market then pulled back, dropping to 1368.70, before rallying back to 1373.77. After pulling back slightly, the market moved higher into the close.
Yesterday I mentioned the possibility of a complex corrective wave forming, and it appears that is what has played out the last two days. After rallying off the 1325.41 low, the SPX completed a 5 wave sequence for wave 1 at 1361.32. From there, an inverted corrective wave formed, first taking the SPX down to 1345.07, before the strong rally to 1375.26. 1345.07 marked the end of wave 1 of the corrective wave, with the move to 1375.26 creating a series of 5 wave sequences of ever diminishing length. This completed wave 2. Waves 3, 4, and 5 took the market to 1368.70, which completed the corrective sequence, and wave 2 from 1325.41.
I would expect the market to continue higher from here. I would now expect waves 3, 4, and 5 to complete at, or near 1393. While I have been looking at 1393 to complete wave 3 from the 1267, there is a count developing that would complete a 5 wave sequence from that point. I hope to elaborate on this later tonight. Either way, 1393 looks like an important point. What happens from there could determine the longer term direction of the market. While I think the market may correct from that level, I do not see a move back down to 1267.
Resistance is at 1387-1397, and then 1426. Support is at 1367, 1357-1358, 1337, and 1323-1326.
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