Wednesday's Market 09/05/12

The market again traded in a narrow range today. After a mixed open, the SPX found itself moving lower, falling to 1401 within the first half hour. The market staged a rally from there, moving sharply up to 1409 before stalling out. The market dropped to 1403, before recovering to 1407. Another move lower found the index at 1401 once again, before moving higher into the close. After moving back to 1405, the market dropped back near 1403 towards the close.

 

The move lower this morning completed another 5 wave sequence from yesterday’s 1409 high, with the following rally to 1408 also completing a 5 wave sequence from the low. The remainder of the morning and early afternoon were spent forming a rather complex wave back down to 1401.38.

 

My short term outlook remains unchanged. Yesterday the market completed a 5 wave sequence from 1426, and wave 4 from the 1267 low. The market would then currently be in wave 5, which could terminate anywhere from current levels, up to 1466. 1395 is still the level to watch on the downside. A break through this level would most likely mean wave 5 from 1267 has completed, and a more protracted correction is underway. I would still expect the market to move higher.