To say that the market is at an inflection point
may prove to be an immense understatement in the coming days. While most, including
myself, have been focusing on whether the market will move up or down a few points
to signal the short-term direction, a move of much greater magnitude may be
forthcoming. It is possible, indeed probable, that the market completed a 5
Wave sequence from 1074.77 last Friday at 1562.63, AND a 5 Wave inverted
corrective Wave 2 from 1370.58 on Tuesday at 1538.57. Perhaps the equilibrium the
market has experienced recently has been the result of these two large
magnitude waves completing within a short time period, and within a tight point
range. At the very least the market has put in a 5 Wave sequence top from
1074.77, with the implication of a fairly large move in whichever direction
this market breaks out.
The market continued the rally from yesterday
afternoon right from the open. The market reached 1552.88 near the open before
the first slight pullback. This was right at the 1553 resistance level I
mentioned yesterday. The resistance proved short-lived, as the market quickly
broke through and rose to 1557.74 by early afternoon. After pulling back to
1553, the market rose again into the close.
The pullback from 1561.56 was a 5 Wave sequence
that included an inverted corrective wave. The termination point of that 5 Wave
sequence turned out to be 1545.90, higher than the actual low of the wave
possible because of that inverted corrective wave. The failure for the wave to
complete at the low may give an indication that this market wants to move
higher.
I am still looking for a break above 1563.62 to
confirm a breakout to the upside, and a move below 1538.57 to signal a break to
the downside. I will elaborate more fully over the weekend.
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