Friday's Market 05/10/2013

Although the SPX tried mightily towards the close, it failed to reach a new time for the first time in what seems a month. The mettle of both the Bulls, and the Bars was tested today, as the market first looked like it was going to break lower, then looked like it was going to move into new high ground, but in the end did neither. It was a very interesting wave structure today; one we have seen before.

The market worked its way higher this morning, coming off yesterday’s decline. The SPX first hit 1630, pulled back to 1626, and then continued higher to 1632. From there the market sold off, dropping to 1625. A rally to 1630 followed, but that was met by more selling pressure, and the SPX fell back below 1624. A choppy uptrend followed, as the SPX worked up to 1630.28, just above the initial rally this morning to 1630.17. After a very minor pullback, the SPX rose sharply to the high of the day at 1633.47.

Those who have followed me have heard me talk about a semi-inverted corrective wave in the past, and I believe that is exactly what we saw today. Off of a low, this structure would have a move up for wave 1, and a pullback for wave a of 2 Wave b of 2 then exceeds the wave 1 high, with waves c, d, and e of 2 forming a zig-zag pattern that terminates below wave a of 2. Wave 3 then generally ends just above wave 1, with wave 4 being a small pullback. Wave 5 is then usually a sharp move higher. Looking at the wave structure from yesterday’s 1623 low, that is exactly what we had today. If you go back and look at the wave from 1357.38 following the 1422.38 high, you will see the same structure. That is not to say the eventual outcome will be the same. I do see 1635.01 as the completion of a 5 wave sequence from 1074.77, with my first support level at 1599.

Thank you.