Friday's Market 06/07/2013

It was one of those days for the market. The SPX gapped up to 1632 at the open, and after a five point pullback, moved virtually straight up to 1642.63. For the next few hours the market meandered lower, dropping first to 1636, and then to 1632.98 after a small bounce. Just as it looked like the market was ready to roll over, the bulls roared back, taking the index to a new high for the day at 1644.40.

In yesterday’s post I gave my count from the 1598.23 low as Wave 1 up to 1617.29, followed by an inverted corrective Wave 2. This indicated a further move to the upside, and I gave 1645 as a target. Working from that count, the gap up open to 1632.41 was Wave 3. Usually, if a wave 2 is a complex wave, such as an inverted corrective wave, wave 4 is a simple wave. Today was an exception, as Wave 4 appears to have been another inverted corrective wave that terminated at 1632.98. This was followed by a well defined 5 wave structure to 1644.40, completing the 5 Wave sequence from the 1598.23 low. The 1644.40 high was just shy of my 1645 target.

The double complex was interesting, as it seems the same structure occurred leading into the 1687.18 high.

Today’s high should be the end of the current move, and should also mark the end of a larger wave structure. I have an upper limit of around 1661 for this move, so it is possible that the SPX will move slightly higher. As I mentioned, I believe today’s high marks the end of a larger structure, and the market should now be ready to correct. I would have an initial target of 1593, and a secondary target of 1548. This wave does, however, have quite a large possible range, and so may be a surprise waiting to happen. It will certainly bear watching. At the moment, 1661 seems to be the critical level. Any move above that may signal a move quite a bit higher.

Thank you.