Although the market action today was not exactly as forecast, it does appear that 1538.57 will prove to be the low of this corrective phase, and the market is now poised to continue higher. There is a chance that this market has not bottomed, and if this is the case it will move substantially lower, possibly to 1520. The more likely scenario is that the market completed an inverted corrective wave from the 10/05/12 1470.96 high yesterday at 1358.57. That should complete Wave 2 from the 1266.74 low, with Waves 3, 4, and 5 pushing the SPX higher.
The market opened higher this morning as expected, but the magnitude of the rise was larger than anticipated. When the market moved above 1557, it became clear that the scenario I alluded to yesterday would not play out. It now looks like the SPX completed a 5 wave sequence from the 1538.57 low yesterday at 1550.46. The market then formed an inverted corrective Wave 2 from that point, which catapulted the SPX to 1559 within the first fifteen minutes of trading. Wave 2 completed at 1555.23, with the market then tracing out the remaining waves, and completing a 5 Wave sequence near the close at 1561.56.
I had been anticipating the corrective sequence from 1563.62 to complete an inverted corrective wave from 1470.96, but my interpretation was that 4 waves had completed, with only Wave 5 left. This interpretation would require a 5 wave sequence from 1563.62. As of yesterday I counted 3 waves completed, and anticipated a move up for Wave 4 and one final move down for Wave 5, which would have completed the sequence.
It now appears that 1563.62 marked the end of Wave 2 of the inverted corrective sequence from 1470.96, and the 3 waves from that high were waves 3, 4, and 5. With the corrective sequence now complete, the market should be ready to move higher.