Weekend Outlook 03/17/2013

Again, I apologize for having been away for some time.

In my Weekend Outlook of September 9^th, I said the current wave from the March 2009 low of 666.79 should terminate somewhere above 1560. With that milestone having been achieved this past week, I thought it an appropriate time to try to resume my blog.

Since it has been some time since I posted, and I have updated some of my counts, I will start with the longer term outlook, and work my way down from there. On the weekly chart you can view my count from the 667 low. It is now most likely that a 5 Wave sequence completed at 1370.58. The breakdown for this count would be 666.79-956.23-869.32-1219.80-1010.91-1370.58. The market corrected to 1074.77 from that high, before resuming the uptrend. So far the market has completed two impulsive 5 Wave sequences to the upside from that point, with two intervening corrective sequences. The third sequence to the upside is now unfolding. The target for this wave would be 1608-1664.

 

If we look at the wave structure from the 667 low to 1371, we can see that it was a simple 5 Wave structure, with no complex corrective waves. This would imply that 1370 is Wave 1 of another simple 5 Wave structure higher, with wave 3 shorter than wave 1, and wave 5 shorter than wave 3. A move to 1608-1701 would then complete Wave 3 from 667, and I would expect Wave 4 to follow. This would then require a fairly severe correction, perhaps to 1200-1250, before the uptrend resumes, with an ultimate target of 1688. The 5 Wave sequence from 667 would then be 666.79-1370.58-1074.77-1608-1212-1688.

 

On the Daily chart we can see the progress of the wave from the 1074.77 low. The market has complete 4 waves thus far, with Wave 5 sub-dividing. So far the sequence is 1074.77-1292.66-1158.66-1422.38-1266.74, with a Wave 5 target of 1540-1664. The sub-dividing Wave has also completed 4 waves, 1266.74-1470.96-1343.35-1530.94-1485.01, with a Wave 5 target of 1608-1701. Combining these two targets gives us the 1608-1664 target for Wave 3 from 667.

 

In the near term, the market only needs to complete a 5 Wave sequence from 1485.01 between 1608 and 1664 to complete Wave 3 from 667. This wave has been quite complex, and has two possible course at the moment. The sequence could move higher straight to 1608-1664, or we could see a short term top at 1565. From there I would anticipate a pullback before the resumption to above 1608. The first support level is 1554, and then 1528-1535.

 

If the market clears 1565, the market should move above 1608, with a substantial correction to follow, possibly to 1200-1250. If the market encounters resistance at 1565, and falls below the 1554 support, it could move to 1528-1535 before rising above 1608.