Monday's Market 04/29/2013

Apparently the market did not like my suggestion of 1566 for the next price level. It seems I was correct about the length of the next move, just a bit off on the direction.

The market gapped up at the open again today, hitting 1588 before pulling back. The move above Friday afternoon’s high signaled an inverted corrective wave was in progress, and that is what occurred. After the pullback the SPX rose again to 1592, pulled back, moved higher to 1595, pulled back, and then hit the high of the day at 1596.65. The market then fell into the close.

The SPX completed a 5 Wave sequence from 1577.56 at today’s high, which now gives us three sequences completed from the 1536.03 low, 1536.03-1592.64-1577.56-1596.65. This, I believe, puts the market in a precarious position. My current count has the current wave from 1536 as Wave D of an inverted corrective wave from 1292.66 October 2011 high. After this wave terminates, I would expect one more move lower before the market continues higher. If this count is correct, a move to 1598 would complete the sequence from 1536, and possibly be the start of Wave E to the downside. Since Wave D would complete beyond Wave C, I would expect Wave E to be less than the 61 point move from 1597 to 1536.

There are a number of possibilities if the market moves up to 1598-1602 and then moves lower. All of these would indicate a move lower, so I will not go into all the details. If the SPX breaks above 1602, it would appear the market will see higher prices before Wave E begins.

The real problem, as I see it, is if the market moves below 1577.56 without making a new high. This would most likely mean that Waves C, D, and E complete at 1536, with the current 3 waves from that low being Waves 3, 4, and 5 from 1074. Looking at it another way, it would mean the entire wave sequence from that point would be complete, and should now be followed minimally by Waves C, D, and E  from May 2011 1370.58 high. Waves 3, 4, and 5 would then complete an entire sequence from 666.79.

This would mean a larger correction than the less than 61 point move in the first scenario, but still most likely within expectations. There is one possible count however, that would indicate the start of a major correction from today’s high.

I will not get too far ahead of myself, so I will take this one step at a time. For now, a move to 1598, followed by a pullback would probably indicate a minor, less than 61 point correction. A move above 1602 and we should see higher prices before the current wave completes. A move below 1577, without making a new high, would most likely mean a larger correction is underway.

Thank you.