The market traded in a fairly narrow range this week, much less than the previous week’s range. Having closed out the week at 1391, the market opened higher on Monday, reaching a new uptrend high of 1399.63, before pulling back to 1394. Tuesday saw another strong opening, and another new uptrend high of 1407.14. By Wednesday morning the market had fallen back to 1396, and then staged a rally that lasted into Thursday, bringing the market back up to 1406. However, by Friday’s opening, the market had dropped once again to 1396. A move higher from there to 1402 was followed by another sell-off to 1397, and then a fairly strong rally into the close left the market at 1406 once again.
In last Weekend’s Update, I said 1391.74 was the termination point of wave 3 from 1267, with wave 4 possibly ending at 1354.65. I pointed out that this scenario gave a target for wave 5 of 1335-1375, slightly off from the 1426 or 1497 target I was looking for. During this past week I also commented on the fact that with the down waves consisting of waves of increasing lengths, and the up waves composed of waves of diminishing lengths, a move to the downside was possible, and that that down move may bring the current target back into line with the 1426 or 1497targets. Instead, it appears the market has formed a more complex corrective wave, which accomplished the same thing.
1391.74 looks like the termination point of wave 3 of the ongoing move from 1267. The initial move down to 1354.65 now appears to be wave 1 of a corrective wave 4 from 1391.74. Wave 2 of this wave carried the market to the new uptrend high of 1407.14. Wave 3 then completed on Wednesday at 1396, with the move back up to 1406 on Thursday completing wave 4. The ensuing move down to 1395.62 on Friday completed wave 5 of the corrective wave, and wave 4 from 1267.
This scenario projects wave 5 to complete above 1475, with 1497 remaining my target for this wave. If this scenario plays out, I would expect a move higher from Friday’s close, initially to the 1410-1414 level. This projection is based on the sub-wave structure from the partially completed wave from 1395.62. This would complete the first wave of wave 5 from 1267.
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