Tuesday's Market 04/16/2013

In the past week, the market has gone up thirty points, dropped forty-five, and up twenty-three. There is a very interesting count developing which could bring us right back where we were a week ago, and with the same target; 1619.

The market opened markedly higher today, in sharp contrast to the action from yesterday. The market popped above 1563, and the quickly found itself at 1566. The market then began to fall back, dropping to 1559.93 before regaining its footing. The rally then continued, as the SPX ran up to 1573.03 with only minor pullbacks. After hitting 1573, the market fell back once again. But a drop to 1567.64 was soon followed by a rally to a new intra-day high at 1575.35.

Yesterday I said the market had completed a 5 Wave sequence to the downside, and a move above 1559 would signal a resumption of the move higher. With the market opening above that level at today’s open, that remains the strongest possibility. The SPX completed Waves 1, 2, and 3 of a 5 wave advance today. The opening pop to 1566.22 was Wave 1. Wave 2 was an inverted corrective wave, with Waves 1, 2, and 3 completing at 1559.93. Wave 4 was then the more powerful move to 1573.03, and was followed by Wave 5 at 1567.64, to complete Wave 2 from 1552.58. The rally into the close at the moment appears to be Wave 3 of that sequence. It is possible that Wave 4 completed with the slight dip into the close. If it did Wave 5 should complete at 1579-1580.

With the current structure of today’s partially completed wave, it would appear to be a corrective wave as opposed to an impulsive one, which becomes problematical if the market is to move higher. The market may be able to rectify this seeming inconsistency however. If the SPX completes this sequence at 1579-1580, there should be support near 1565. The sequence 1573.89-1567.97-1597.35-1552.58-1579-1565 would actually complete a 5 wave corrective sequence from 1573.89. That would complete Wave 4 from 1538.57, and give a target for Wave 5 of 1619 once again. It would be extremely unusual for a wave to form in this fashion, but this has been a very unusual market for some time.

I still consider the market to be up trending from the 1538.57 low. An open above the 1580 level would seem to confirm this. My first target would be the 1598-1612 area. If the SPX drops below 1538.57 I will consider this uptrend to be over.

Thank you.