Monday's Market 03/18/2013

The market started the day with a sharp sell-off, with the market dropping to 1545.13 within the first few minutes of trading. By midday the SPX had recovered to 1558 before the sellers came back. After falling to 1554, the market once again moved higher, this time to nearly 1559. At this point the sellers once again stepped up, and took the market down to 1550 shortly before the close.

 

This market has been quite interesting and quite difficult for some time. Of course that is half the fun. It now appears the market completed a 5 Wave sequence from 1485.01 last Friday at 1563.62. Since then the market seems to be forming a nested inverted corrective wave from that point. If this interpretation is correct, the bias of the market for the next several days should be down, but should also be quite choppy.

Near term, I expect a lower open tomorrow, back near 1550. After that the market should rise to 1559, before testing today’s 1545 low.

 

For the medium term, the market is now in Wave 5 of an inverted corrective wave from 1470.96. This count can be seen on the Daily chart. If this count is correct, I would expect this correction to conclude above 1535.  From there I expect the market to move higher, with my next target still above 1608.

 

It is interesting to compare the current inverted corrective wave from 1470.96 on the Daily chart to the one that formed on the Hourly chart between 1448.00 and 1463.76. This would be between waves 1 and 2 in green on the Hourly chart. It is also interesting to not what happened at the conclusion of that wave. Time will tell if we see the same thing.