After hitting another all-time high on Tuesday,
the SPX backed off that level today. In yesterday’s post I said a 5 Wave
sequence had completed from 1536.03, and it was a likely point for the
termination of Wave D.
If it was, I was expecting Wave E to complete between 1582-1536. My target was 1573, with first
level support at 1590.
The market dropped at the open, initially to
1591.48. After a short-lived bounce, the market continued lower to 1587.86.
After a five point rally, the SPX headed lower once more, this time dropping to
1584.70. A six point move higher came next, and then one final move lower to
1581.28.
Today’s wave structure was fairly complex, as it
seems the market is trying to make this as difficult as possible. To start
with, I believe Tuesday’s 1597.57 high was the termination of Wave D. This morning’s initial
drop this morning, 1597.57-1591.48-1593.99-1587.86 I see as three separate sequences.
An inverted corrective wave followed,
1587.86-1593.11-1584.70-1589.10-1586.60-1590.79. That portion of the wave I am
fairly confident about, which gives us either 4 waves of a 5 Wave sequence
completed, or the beginning of a nested inverted corrective wave sequence. I see it as 4 waves, with Wave 5 of that
sequence completing at 1584.16. From there, the SPX went on to complete another
5 Wave sequence, of one higher degree at 1581.28. With a 5 Wave sequence completed
from 1597.57 and within my target range for Wave E, this could very well be the end of this move
lower.
A move above 1590.79 would confirm this, while a
move lower would indicate the nested inverted corrective wave sequence is in
play, with lower prices expected. 1573 would still be my target.
If Wave E has completed, that would be Wave 2 from 1074.77. We should now
see waves 3, 4, and 5 to the upside. I still
see significant resistance at 1598, and unless the SPX can break through that
1598-1602 resistance zone, like on this next move, I think it is highly likely
that this entire uptrend will from 1074.77 will end there, in some king of
triangle formation. If Wave 3 ends around that level, Wave 4 should be a small pullback, and one more move
into that zone for Wave 5 will end it.
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