The market opened sharply lower this morning, falling to 1361 in the first minutes of trading. The SPX staged a pretty strong rally off that low, almost making it back to 1374, but the rally ended there. Another steep drop followed, this time taking the market down to the low of the day at 1354.65. Unlike the earlier rally, this one started slowly, but then gained momentum throughout the afternoon, closing just off the rally high of 1365.86.
On Tuesday I mentioned that if the market broke below the that day’s low by more than a couple of points, the market was probably forming a complex corrective wave 2, that would eventually carry the market significantly lower. On Wednesday the market did fall below that level, and today the market moved significantly lower.
The market did end up forming a complex inverted corrective wave 2. After a dip at the open on Wednesday, the rally to 1385 formed wave 1, while Wednesday afternoon’s late rally from 1373 to 1381 was wave 3. Wave 4 took the market down to 1361 Thursday morning, with wave 5 being the rally off that low to 1374. That completed wave 2 from 1392, with waves 3, 4, and 5 forming on the way down to the 1354.65 low.
With a 5 wave sequence from 1392 now completed, this could be the end of the correction. The market then completed a 5 wave sequence off the 1355 low into the day’s close. I would expect the market to now continue higher. It is possible for the market to move lower, but I would expect only slightly lower lows than we saw today.
Support is at 1356, and then 1346. Resistance is at 1367, 1384, and then the cluster between 1387, and 1397.
If the correction completed at 1354.65, what is your projection for wave 5 now?
ReplyDeleteHi wavedive,
DeleteThe wave 5 projection for that scenario would be 1435-1475.
Thanks,
Steve