It was another record day for the markets. This
seemingly endless uptrend will end eventually, I think, but today was not the
day.
As I had mentioned yesterday, there was
considerable resistance at 1598-1602, and the only way through that level would
be through an inverted corrective wave, which I said could be forming, and
would result in a gap above that level. Gap it did, as the SPX reached 1616 in
the opening minutes of trading, and then continued on to 1618.42. The SPX
drifted lower for most of the day after that, falling to 1613 before rebounding
to 1616. The SPX then moved lower into the close.
It appears that Waves A, B, and C of the inverted
corrective wave formed yesterday after the late afternoon 1598.60 high. Wave D was the gap opening to
1616.16, and the dip to 1613.06 that followed was Wave E, and completed the
wave. This completed Wave 2 from
1581.28, and Waves 3, 4, and 5 quickly followed, at completed the sequence at
1618.42.
The consolidation that occurred through the rest
of the day appears to be a wave 1, and then an inverted corrective wave 2. This
would suggest that the SPX will continue to move lower to complete the 5 wave
sequence. The next support level would be 1599, and that seems like a likely
spot for this move lower to end. I would then put a price target for the next
advance at 1630.
1630 would then mark the end of a complete
sequence from the 1074.77 low. To complete the entire sequence from 666.79
therefore, I would expect to see a corrective wave from 1630, followed by a
move higher, another corrective sequence, and one final move higher. Sp
although 1630 would complete a sequence from 1074.77; it would not necessarily
mean more than a modest correction. There are several ways the rest of this
sequence could play out, however, with the wild card being the depth of this
correction from the possible 1630 level. I will try to cover this in more
detail over the weekend.
Thank you.
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