Monday, May 20, 2013

Monday's Market 05/20/2013


Hard to believe. Another all-time high for the SPX. At times it seems like this will never end, but we all know it will. Sometime. If today was not the start of a small pullback, it should be coming soon.


After another gap open, the SPX hit 1658.31 before pulling back. The SPX then moved higher to 1660.74 before another minute pullback. From there the market moved steadily higher, hitting 1672.84. That was followed by a somewhat larger pullback to 1663.52. This 9 point pullback was similar in magnitude to the 11, and 12 point pullbacks we saw last Wednesday and Thursday.

The rise from Friday’s 1648.60 low to 1672.84 completed in a 5 wave sequence. The drop to 1663.52 would then seem to complete an inverted corrective wave from Wednesday’s 1661.49 high. We should now see one more move higher to complete the sequence from 1581.28.

To review, 1581.28 was the termination point for Wave 2 from 1074.77. Once the SPX completes a 5 wave sequence it will complete Wave 3. At that that point I would expect a correction, followed by another move higher to complete Wave 5. That is the point at which I would expect a more substantial correction.

So far, from 1581.28, the SPX completed 5 waves to 1635.01, and then a higher degree sequence at 1661.49. The three aforementioned pullbacks formed the inverted corrective Wave 2, and should be followed by waves 3, 4, and 5 higher. Because of the structure, it would be possible to complete this sequence without making a new high.

If the SPX moves to 1668, and then falls below 1663.52, I would expect a pullback has begun. Should the SPX move above that level, 1677-1681 could be the next stop.

Thank you.







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