Friday, April 12, 2013

Thursday's Market 04/11/2013


Although the market moved higher again today, it was a much choppier trading session than yesterday. Along the way, there were a number of interesting wave formations, and left open a slight possibility that a 5 Wave sequence has completed from 1540.29.

The market opened slightly lower, falling to 1586.17 before resuming yesterday’s strong rally. From that point it looked like a continuation from yesterday, as the SPX rose to a high of 1597.35, with the largest dip being less than two points. Just when it looked like the market was going to attempt to break 1600, it began to sell off. It quickly fell to 1592, and then came a series of oscillations with slightly lower highs, and slightly lower lows. From 1592 the SPX went to 1596.75, 1591.43, 1595.63, and finally 1591.05. The market then rose slightly into the close.

The rise from 1585.33 to 1597.35 contained 5 distinct 5 wave sequences, 1585.33-1589.07-1586.17-1592.32-1590.63-1597.35. However these individual sequences did not complete a 5 Wave sequence, as the correlation for this is only .9378, well below my model’s threshold value. This indicated a more complex wave structure was underway, and indeed I believe that is what happened. It appears the market is forming a nested inverted corrective wave structure that should carry the market higher. This structure contains a wave 1 up, a wave 1 down to initiate the inverted corrective wave, another wave 1 up, followed by another wave 1 down to start a second inverted corrective wave. I will spare everyone the gory details of how this wave unfolded. The result was the second inverted corrective wave terminated at 1592.44, and the second 5 wave structure completed at 1596.75. The first inverted corrective wave carried the market back down to 1591.05, which leaves us with one 5 Wave sequence to complete. 


If 1591.05 is Wave 2 of this sequence, I would expect a move above 1597 for Wave 3, a slight pullback, and then Wave 5 near 1605. It was correctly pointed out to me yesterday that I made a calculation error. I said the sequence from 1567.97 would complete as 1599-1597-1621. It should have read 1605-1599-1621. I apologize for the error.

When the current sequence from 1567.97 completes at 1605, it will complete Wave 3 from that point. I would expect a small correction to 1599, and then a final push to 1621 to complete the 5 Wave sequence from 1538.57. At that point I would expect a correction, possibly to 1551, before one more rise to slightly higher levels to complete the sequence from 666.79.

I mentioned at the start that there is a slight possibility of a 5 Wave sequence having completed from 1540.29. I counted the move from 1540.29 to 1573.89 as a 5 Wave sequence. The move then from 1567.97-1586.39 completed another sequence, which I see as one degree less than the first, followed by an inverted corrective wave to 1585.33. Putting the sequence together from 1540.29 to today’s high gives us 1540.29-1573.89-1567.97-1586.39-1585.33-1597.35. This sequence has a correlation of .9913, within my model’s threshold. However, as I described above, I do not see the move from 1585.33 to 1597.35 as a complete 5 Wave sequence. If it is not, a sequence from 1540.29 cannot be completed. It is possible that I have misread the wave, and since the sequence from 1540.29 to 1597.35 does fall within my model’s parameters, it needs to be considered as a possibility. If the market falls below 1585.33, this will be the likely scenario, with a target around 1551.

Thank you.








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