The SPX traded on both sides of unchanged at the
open, coming off yesterday’s strong move to the upside. Soon the market moved
lower, dropping to 1586.50. At that point the rally once again took hold, with
the SPX rising to 1592. After some choppy upside movement, the SPX rose to
1596.78 before pulling back. This pullback held at 1593.56, and the market mode
one more move higher, to an all-time high of 1597.38.
After the opening pullback to 1586.50, the SPX
appears to have risen to a wave 1 at 1592, followed by a corrective wave 2
sequence. Wave 3 occurred at 1596.78, followed by wave 4 at 1593.56, and wave 5
at 1597.38. This sequence may have completed a 5 Wave sequence from 1536.03,
which may signal the long awaited end of Wave D. This sequence can be seen as
1536.03-1592.64-1577.56-1596.65-1586.50-1597.38.
With the market action of today, it seems that the
SPX is still in, or has just completed Wave D from 1292.66. The other scenarios I mentioned yesterday would
seem to be lower probabilities at this point. I am not ready to declare Wave D over. This market has
risen in spite of itself, and may continue to do so. I can however make some
statements about what I am looking for.
First, if Wave D is to continue, it will have to do so via a complex corrective
wave. This would be similar to what we saw between Friday afternoon, and Monday
morning; a small dip, followed by a sharp move to clear the 1598-1602
resistance area, and then choppier trading completing the complex corrective
wave, and the next 5 wave sequence. I see 1590 as the first support level, so
that seems like a logical limit to the pullback.
It is more probable that Wave D ended at 1597.38, with
Wave E expected to follow. Since
Wave D has now exceeded Wave B, I would expect Wave E to be less than the 61
point decline we saw for Wave C. This wave should end somewhere between 1582, and 1536, with a
target of 1573.
Thank you.
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