Although my analysis on Tuesday concerning Wednesday’s
possible market action seems to have been prescient, and I certainly hate to be
the one to rain on my own parade, I believe it is more important to get things
right, than to be right.
The market followed one of my scenarios quite
precisely, but also left a number of questions. As I noted yesterday, the wave
shape looks quite odd, and given my count on the 3 Minute chart as of EOD
Tuesday, the decline from 1573.66 to 1549.80 looks, and counts, best as a
single 5 Wave sequence. I will address this in more detail shortly, but first a
review of today’s action.
This morning the market continued the rally it
began yesterday afternoon, rising to 1562.60. This completed a 5 Wave sequence
from 1549.80 with 1549.80-1555.80-1557.34-1560.88-1559.80-1562.60, and a model
value of .9999. This wave contained an inverted corrective Wave 2, forming
1555.80-1553.68-1556.17-1554.60-1557.56-1557.34, which has a model value of
.9981.
From there, the SPX formed a simple 5 Wave
sequence as 1562.60-1552.71-1560.40-1553.83-1556.18-1552.52, this sequence has
a model value of .9955. After reaching the 1552.52 low, the market rose again,
but failed to reach a new high for the day. This sequence went
1552.52-1554.91-1556.19-1559.42-1556.66-1560.26, and also contained an inverted
corrective Wave2. The main sequence had a model value of .9981, and Wave 2
traced out 1554.91-1553.88-1557.77-1556.80-1557.19-1556.19. This sequence had a
model value of .99996.
Today’s market had the feel of a consolidation day
following Wednesday’s big decline. With no clear trend emerging today, the
question of where the market goes next remains, which leads back to the first
part of this post. One other thing that has bothered me has been the failure of
a larger 5 Wave sequence to emerge from the 1538.57 low. There are not usually
this many peaks and valleys without some sequence completing. I spent a good
deal of time today reviewing the move from that point, and concentrated on the
move from 1546.22 to 1573.66. After reviewing that part of the chart, one
alteration clears things up a bit. Between 1551.90 and 1570.57 there is a peak
visible at 1568.30. It is most likely that a 5 Wave sequence from 1551.90
completed there, and then formed a semi-inverted corrective wave from 1568.30
to 1558.47. This count can be seen in parentheses on the 15 Minute chart. A 5
wave sequence from 1546.22 then emerges as
1546.22-1563.95-1551.90-1568.30-1558.47-1573.66. This sequence has a model
value of .9997, and completes at the peak.
If this count is correct, and I believe it is, the
first four points from 1538.57 are most likely a series of Wave 1’s. This would
indicate a further move to the upside is close at hand. Since several counts
are still possible, and going into each one in detail is not helpful. What is
helpful at this point is to watch important market levels that will indicate the
next market move.
The first level to watch is still the 1565.50
level. A 5 Wave sequence from 1538.57 could still terminate at this point, and
the market would then see another move down, which will hold above 1538.57, and
one final move higher to a marginal new high.
If the market moves above 1565.50, the nested
inverted corrective wave that I have favored for awhile would be the most
likely outcome. This would indicate a substantial move to the upside
To the downside, 1547 is the point to watch. The
market could complete an inverted corrective wave from 1561.56 at this point.
If an inverted corrective wave does complete at this point, I would anticipate
two moves higher similar in size to the 1538.57 to 1561.56 advance, separated
by a corrective Wave 4. This would put the market in the 1580-1600 range.
If the market moves below 1547, a larger move to
the downside has most likely started. If the market follows that up with a move
below 1538, we could move substantially lower.
Thank you.
GREAT ANALYSIS
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