Not very long ago the market was going straight
up, with barely a correction. It has now seemed to turn into a market that
makes large moves in opposite directions from day to day. The medium term
direction of the market is still unclear, with either a rise above 1700, or a
steeper correction into the mid-1500’s the next likely move.
The day started with a gap down to 1646, quite the
opposite of what I was expecting. After a rebound to 1653, the SPX continued
lower to 1640.05. A rally was next, as the index rose to 1648, pulled back to
1642, and then rallied to 1654. The SPX then moved lower into the close,
dropping to 1647.69 with only a small 4 point bounce along the way.
Going back to the 1687.18 high, the SPX completed
a sequence lower at 1635.53. The index then completed sequences higher at
1655.50, lower at 1636.88, and higher once again at 1674.19. Now the SPX has
completed a sequence lower at 1640.05. This series of sequences can be seen as
the completion of Wave 4 at 1635.53, followed by Waves 1, 2, 3, and 4 at
1635.53-1655.50-1636.88-1674.19-1640.05. This would project a Wave 5 high of
1702-1710.
This series can also be counted as a Wave 1 down
to 1635.53, and 3 waves of an inverted corrective wave at
1635.53-1655.50-1636.88-1674.19. Today’s move lower would have completed the
first wave of a 5 wave sequence that would eventually become the 4th
wave of that inverted corrective wave. This would indicate a move into the 1500’s.
Like everyone else, I am waiting for a break of 1635.53 to indicate a move
lower.
On a shorter time scale, we can look at the move
off today’s 1640.05 low. It appears that the SPX completed Wave 1 at 1648.38,
and was followed by an inverted corrective wave 2 that terminated at 1647.69.
This would imply that the market should at least open higher tomorrow. The
first target for this wave would be 1659, and the 1665. 1665 would also be the
first resistance level set up by the 1674.19-1640.05 decline.
Although the medium term picture is ambiguous,
short term I would look for a move to 1659, a small pullback, and a move to
1665.
Thank you.
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