The market opened lower today, spiking below 1399, before recovering slightly to 1400. After that the market drifted slightly lower, bottoming at 1398.04. The market then rallied off that low, initially to 1401, and eventually carrying the market back near 1410 by late morning. After a small pullback to 1407, the rally continued. A move above 1412 was followed by a pullback to 1409, and then a final push to 1413. At that point the market fell rather quickly to 1410, before moving higher into the close.
Yesterday I mentioned the possibility of the market moving slightly lower this morning, but contended that it should hold above 1395. From there I expected the market to rally. The market completed a 5 wave sequence this morning from the 1426 high. Wave 1 of this sequence completed yesterday, with the small rebound into Thursday’s close serving as wave 2. The spike lower this morning was wave 3, the slight rebound wave 4, and the final drift lower to 1398 completed wave 5, holding above the 1395 level I had mentioned.
The rally off that low began with a 5 wave sequence completing at 1410. This wave featured a series of expanding wavelengths, indicating a further move higher. After a small pullback this rally continued, forming another 5 wave sequence that completed at 1413. This last series of waves were decreasing in length, indicating either the end of the move, or at the very least, a loss of momentum that will result in the end of the move coming soon.
Today’s low most likely completed wave 4 from 1267, now putting us in wave 5. With this wave in the target zone for wave 5, and the aforementioned decreasing wavelengths, makes it very likely that the move from 1267has completed. A move below 1395 should confirm this, with a further correction most probable. I have been operating under the assumption that this is wave 3 from the 667 low, but the fact that the current move rose above the previous 1422 high, and yet the 5 wave sequence completed below that high, buts that assumption in doubt. One possible scenario is that the move down to 1267, and then back up to 1426, was waves 1, and 2, of a complex correction from the previous 1422 high. I will cover this possibility, and the others, over the weekend.
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