Wednesday's Market 07/31/2013

Since making a low at 1676.03 last Friday, the SPX has traded generally higher, but in a quite choppy fashion, seemingly awaiting the release of today’s FED minutes. With many people believing that the release of those minutes would decide the direction of the stock market, the lack of conviction the past few days should have surprised no one. The difficulty has been trying to decipher the shorter term waves to anticipate the longer term direction. I have been consistent for quite some time that the market was headed higher, with a minimum target of 1776.

As was the case yesterday, the SPX headed higher at the open, moving to 1692 before pulling back. Another move higher brought the index just below 1697 by mid-morning. At that point the SPX started to sell-off, falling back to 1689. With the release of the FED minutes, the volatility increased, with the SPX undergoing a series of sharp swings. The first was to the upside, with the index spiking to 1694. The second was a quick drop to 1686. That was followed by another sharp move higher to 1698, then a drop to 1685 to end the day.

Since Friday’s 1676 low, I count 3 waves to the upside, and 3 waves to the downside. The first 5 waves, 1691.85-1681.86-1693.19-1682.42-1698.43, do not meet the criteria for a 5 wave sequence, an indication that the market will move higher. The last 5 waves, however, 1681.86-1693.19-1682.42-1698.43-1684.94, do appear to complete a sequence. Looking at the three moves lower, the first wave was 10 points, the second 11 points, and the third 13 points. For each wave, the length increased as the starting point became higher. This seems to complete an inverted corrective wave from 1691.85. So the market has most likely completed Wave 1 at 1691.85, and Wave 2 at 1684.94 of a 5 Wave sequence higher, which most likely will carry above 1776.

There of course is still the possibility that I am wrong, and the market will head lower from here. If the SPX moves below 1676, the next support level is 1657.

Monday's Market 07/29/2013

On Thursday the SPX completed a 5 Wave sequence higher to 1690.94. On Friday morning the index moved lower, eventually finding itself at 1676.03. Last week I said that it appeared that the SPX had completed a 5 wave sequence from 1604.57 at 1698.38. With the action on Thursday and Friday it seems that I was a little ahead of myself, as that high now appears to have completed a sequence from 1671.84, but not 1604.57. The moves on Thursday and Friday can then be seen as the completion of an inverted corrective wave from 1684.51. This wave took the form 1671.84-1698.38-1680.07-1690.94-1676.03. That would then complete 4 waves from the 1560.33 low. The optimum target for wave 5 would then be 1778, very close to my ongoing minimum target of 1776.

This morning the SPX started to the downside, reaching 1687 before bouncing back to 1691. The selling then continued through the morning, dropping to a low of 1681.86. After that the index started to rally, rising to 1686 before a small pull back. The rally then continued to 1688.50 by mid-afternoon, which was followed by a larger pull back to 1684.

From the 1676.03 low, the SPX completed 5 waves higher to 1691.85. This was followed by a 5 wave sequence lower to 1681.86. From that low it would appear that the index is forming a more complex wave to the upside.

This has been a very interesting wave, and it should continue to be through the end of the week for obvious reasons. Things can change quickly in a market like this. A move below 1676.03 would indicate my count is incorrect, and may signal a further move to the downside. I am still looking for a move above 1698.38 to confirm the continuation of the current move. My target to the upside remains a minimum of 1776.

Thursday's Market 07/25/2013

The SPX moved lower this morning, continuing the pull back from yesterday’s 1698.38 high. The index fell to 1690.31 before rebounding, a rebound that took the SPX into positive territory at 1687.05. That in turn led to another move lower, which found the index eclipsing the previous low by a fraction, stopping at 1680.07. The SPX moved steadily higher from there, rising to 1689.42 before pulling back to 1685.04. From there the index again moved higher, making it to 1690.94 before fading into the close.

As I indicated yesterday, the SPX was in the process of forming an inverted corrective wave 2 after the wave 1 drop to 1687.56. This corrective wave did end yesterday at 1686.43, with waves 3, 4, and 5 completing this morning at 1680.31. This turned out to be only wave 1 of a higher degree wave, with wave 2 carrying to 1687.05, followed by waves 3, 4, and 5 completing just below the previous low, at 1680.07. From there the SPX appears to have completed a 5 wave sequence higher at 1689.42. After a small pull back, the index completed another 5 waves at 1690.94.

The SPX seems to have completed a wave 1 at 1689.42. The pull back appears to have occurred in three waves, and with another 5 wave sequence completing above the 1689.42 high, it is likely that the index has not yet completed the current move higher. If the SPX move above 1698.38, the probabilities for a continuation of the uptrend will increase. At this point it looks like my 1718 is still in play on the upside.

If the SPX moves below 1680.07, the most likely stopping point would be 18-20 points below the high from 1680.07, which is currently 1690.94. This would give a target between 1671 and 1673. Otherwise support is still at 1680, and then 1655.

Wednesday's Market 07/24/2013

The market gave it a valiant try, but fell just short of managing a new all-time high. After the sell-off into yesterday’s close, the SPX gapped up again at the open, reaching 1698.38, less than a half point from the previous all time high. The index was quickly turned away from those lofty levels, as the SPX sold off rapidly, dropping into negative territory, and hitting 1687.56 before attempting to rally. The rally would not last long; as after rising to 1691.67, the SPX began to fall again, this time moving down to 1682.57. Following that, the index bounced around in a narrow four point range for the rest of the day.

Yesterday I noted that 1696.26 completed a 5 Wave sequence from 1671.84. With the drop yesterday afternoon, followed by the move above that 1671.84 high, the index completed a sequence from the 1604.57 low. This can be counted as 1604.57-1684.51-1671.84-1696.26-1691.52-1698.38. This most likely is the third wave from the 1560.33 low. There are still several ways in which this wave can complete, but my minimum target of 1776 remains intact.

From today’s 1698.38 high, the SPX fell to 1687.56 for wave 1 of this pullback. The small rally unfolded in three waves to 1691.67, and is most likely part of an inverted corrective wave 2. The drop to 1682.57 and small bounce from there may have completed this wave 2. The appearance of in inverted corrective wave indicates that there is still more downside to come before this pullback completes.

There is considerable support within a couple of points either side of 1680, and then 1655 after that.

Tuesday's Market 07/23/2013

It was another record setting day for Wall Street, as the SPX reached another all-time high of 1698.78. The market gapped up at the open again today, and hit that record within the first few minutes of trading. After that it was what for this market qualifies as a steep decline, as the SPX dropped to 1691.13 after the first hour and a half. The market tried to rally after that, rising through most of the afternoon, with the index climbing back to 1696.26. The SPX then sold off during the last hour, dropping to 1691.52 before rising into the close.

Looking at the waves from yesterday’s 1697.61 high, I count a 5 wave sequence down to 1693.01, a sequence up to 1698.78, followed by 3 waves down at 1694.05-1695.58-1691.13. This completed a semi-inverted corrective wave from the 1697.61 high, which was a little unexpected. From 1691.13, the SPX completed what appear to be 3 waves higher, before the late afternoon sell-off.

The appearance of the semi-inverted corrective wave, followed by what appear to be only 3 waves higher, leads me to believe that 1696.26 is the completion of a wave from 1671.84. This could be Wave D of an inverted corrective wave from 1626.61. If this is true, I would expect a pullback to around 1684. This could also be a smaller degree wave 1 from 1671.84. This will be determined by whether or not the SPX moves lower from here.

Monday's Market 07/22/2013

Last Thursday the SPX hit an all-time high of 1693.12. Following that high, the index turned lower, falling to 1687.10 before rebounding. After climbing back to 1691.53, the SPX then fell into the close. After opening to the downside on Friday, the SPX rallied for most of the day, but traded in a narrow range, staying below Thursday’s high. The rally continued this morning, as the index gapped higher, hitting another all-time high of 1695.05. That was followed by a small pullback, followed by another rally which carried above the previous high, as the SPX reached 1697.61. The index pulled back during the mid-day hours, and then moved higher into the close.

I have been stating since last week that I believed the current rally would carry us first to 1718, and then above 1776. It has been awhile since I covered my longer term count, and felt it was time to cover that once again, as it would clarify my current target of 1776.

Starting from the 1074.77 low on the Daily chart, you can see my current count. Those who follow me will know that I often talk of inverted or semi-inverted corrective waves. If you are familiar with Elliott Wave Theory, these complex corrective waves are similar to extended waves. Just as with an extended wave in EWT, a 5 wave sequence containing an inverted corrective wave produces 9 waves.

The Daily SPX chart from that 1074.77 low shows Waves 1, 2, and 3 completing as 1074.77-1292.66-1158.66-1422.38. From the 1422.38 high, the index then completed an inverted corrective wave as 1422.38-1266.74-1470.96-1343.35-1687.18-1560.33. As you can see on the chart, the SPX has now completed 8 discernible waves. My model, of course, is based on a mathematical relationship between waves, and the inverted corrective wave I described above meets this criteria. The target for the last wave, Wave 5 of the sequence, can then be determined using my model. This results in a minimum target of 1776.

Looking at the 15 Minute chart from the 1560.33 low, we can see that the SPX has now completed 4 waves, at 1626.61-1604.57-1684.51-1671.84. I have labeled 1626.61 as Wave 1, and the other waves are denoted with an “X”. The reason is that these waves could be waves 2, 3, and 4, or the beginning of a complex corrective wave. The wave structure should become clearer after the next pullback. Given the 4 waves completed thus far, 1776 would satisfy the parameters for a 5 Wave sequence.

From the 1671.84 low on the 3 Minute chart, the wave structure has been a bit more complex. After reaching 1677.14, the SPX formed an inverted corrective wave, which ended at 1684.57. It appears that a lesser degree sequence is forming from there, with another wave 1, and inverted corrective wave 2 completed. My target for Wave 3 from 1671.84 is 1718. At that point, the market could see a pullback. A move to around 1700 would then give a target for Wave 5 at the 1776 level.

Given the current wave structure from 1074.77, it seems likely that the SPX will move higher to 1718, then pullback, then move higher once again to a minimum of 1776.

Thursday's Market 07/18/2013

Continuing the move up off yesterday’s 1678.12 low, the SPX moved higher at the open, moving up past 1684 at the outset. After a small pullback, the index continued higher, hardly pausing until it surpassed the previous all-time high, and rising to 1693.12. From there, the SPX started giving back its gains, finally falling to 1687.10. Another rally followed, however this one failed to reach new highs, failing at 1691.53. The index then dropped to 1687.52 before rising slightly into the close.

Yesterday I stated that it appeared the SPX had now completed 3 Waves from the 1560.33 low, 1626.61-1604.57-1684.51.Tuesday’s pullback to 1671.84 could be the fourth wave. From that low, I then counted 4 waves, 1677.14-1672.99-1684.75-1678.12. Given that count, it was likely that the index would move higher.

Today’s action formed a 5 wave sequence from 1678.12 to the high of 1693.12. The decline from that point was interesting, with a 5 wave sequence completing at 1688.28. It then appears that a rather rare corrective wave 2 completed at 1691.53. Technically this is often referred to as an expanding triangle, and it went 1689.05-1688.10-1689.36-1687.10-1691.53. Waves 3, 4, and 5 from 1693.12 then completed as 1687.99-1689.37-1687.52. This should now complete waves 1, and 2 of 5 from the 1671.84 low. My target for this wave remains at 1718. If that target is met I am eventually looking for a high above 1776 before a substantial correction.

This seems to be the point that tends to occur within each wave where there is an extreme amount of uncertainty. I do have some concerns due to some technical aspects of the market, but my count still indicates we will see higher prices.

If the market moves below 1671.84 at this point, my current count would be wrong, and lower prices may be on the way. For the moment, I will continue with my current count. Again, I expect the current wave to reach 1718, and ultimately we should see prices above 1776. A move below 1672 would change my view.

Thank you.

Wednesday's Market 07/17/2013

It certainly has been an interesting couple of days for the market. As of the close on Friday, I was still looking for a pull back of around 9-10 points, followed by another move higher. It would now appear that pull back actually occurred on Friday, and was only the 5 point move from 1677.41 to 1672.33. That was followed by a move higher that culminated at the open on Monday at 1681.99. After another pull back to 1677.89, the SPX made a final move to 1684.51.

This last move to 1684.51 most likely completed a 5 Wave sequence from 1604.57. From that high on Monday, the SPX dropped to 1671.84 on Tuesday. My current count would indicate that the SPX completed a 5 Wave sequence from the 1560.33 low at 1626.61. The most likely count from that point is an unfolding inverted corrective Wave 2 from that high. So far, the index has completed 3 of the 5 waves at 1604.57-1684.51-1671.84.

From Tuesday’s 1671.84 low, the index appears to have formed 4 waves of a sequence thus far. After an initial move higher to 1677.14, the SPX pulled back to 1672.99. The index then opened higher this morning, reaching 1683.07 after the first few minute. After pulling back to 1678.58, the SPX continued higher, finally reaching 1684.75. This completed the third wave from 1671.84. The action turned choppy after that, with the SPX pulling back to 1678.64, rallying to 1683.46, and finally pulling back to 1678.12.

If my count is correct, the SPX should now continue higher. This wave could unfold in several ways, but if it unfolds in a simple 5 Wave sequence, my target at this point would be 1718. This move from 1560.33 has been difficult to follow, so it is prudent to use caution going forward. If the SPX falls below 1678.12, my count would be in danger, and a move below 1671.84 would mean it was wrong.

Thank you.

Friday's Market 07/12/2013

Considering the volatility the indices have experienced lately today was in comparison rather tame. There was no gap opening this morning, as the markets opened flat, then moved above and below the flat line, settling at 1672.96. The SPX then tried to rally; moving above yesterday’s high, and rising to 1677.41. Another round of selling took the index down to 1672.33, where it found some support. The SPX continued to trade in a narrow range until late afternoon when the buyers came back. This buying led to an almost six point rally into the close.

I believe that lately I have been guilty of trying to have too many waves complete in too short a time. Taking today’s market action into consideration, it now appears that Thursday’s 1671.03 high marked the end of a sequence from 1647.66, and not 1671.00 as I had thought. As I mentioned before, this wave completed without a complex corrective wave, which usually results in a higher degree wave forming from the previous low. That seems to be exactly what happened, as this morning’s 1677.41 high completed the third wave, and this afternoon’s high of 1679.74 completing the fifth.

With the sequence from 1647.66 completed, the next step is to examine the sequence completed so far from 1604.57. The structure so far consists of a 5 wave sequence that completed at 1627.06, a pullback, another sequence completed at 1657.92, another pullback, and now a third sequence higher that completed today at 1679.74. Taken together, these 5 waves do not yet appear to complete an entire sequence from the 1647.66 low, which makes it most likely that the SPX is forming a complex correction.

Looking at the first pullback from 1627.06, we see that it was just over 12 points, and touched the 55 period EMA. The second pullback was just over 10 points, and again touched the 55 period EMA. If the SPX is indeed forming an inverted corrective wave as I suspect, I would expect another pullback to occur at this point. This pullback should be proportional to the previous two pullbacks, which means it should be slightly less than 10 points. Ideally, a pullback to 1670 would satisfy the parameters for an inverted corrective wave from 1627.06. This wave would be 1627.06-1614.71-1657.92-1647.66-1679.74-1670. As with the other two pullbacks, this one should touch the 55 period EMA, which at the moment sits at 1669.97. Looking at the sub-wave structure of the 5 wave sequence from 1647.66 to 1679.74, a first support level of 1670 is also indicated. This makes it seem likely that we can expect a pullback from today’s high to 1670.

Assuming that pullback occurs, it would mark the completion of an inverted corrective wave from 1627.06. This would then be Wave 2 from 1604.57, with waves 3, 4, and 5 needing to complete. Again, waves 3, and 5 need to be proportional to wave 1, which was just over 22 points (1604.57-1627.06). With the inverted corrective wave being so strong, it is likely that wave 3 will be somewhat smaller than wave 1, and wave 5 smaller than wave 3. Most often in cases like this, wave 5 completes just above the high of the corrective wave (1679.74), with the total length from wave 2 to wave 5 being approximately equal to wave 1. Given a pullback to 1670, this means this sequence should complete near 1692. At that point I would expect a slightly larger pullback.

The second support level indicated by the sub-wave structure of the just completed wave is 1659. Should the SPX fall to this level, I would need to consider that 1679.74 marked the high from the 1604.57 low. Either count suggests higher prices lie ahead.

I would look for a pull back to 1670, followed by a move higher to 1690-1692. That should be followed by a slightly larger pullback. If the SPX falls to 1659, I would expect higher than that 1690-1692 level.

Thank you. 

Thursday's Market 07/11/2013

It was another gap up open for the SPX today. And today I am not just making a joke. After that gap up open, the SPX moved to 1671.00 before falling back. The index slipped to 1666.29 before resuming the rally. First, the SPX made a slightly higher high at 1671.03, and then fell back to 1668.35. After moving sideways into the early afternoon, the SPX began to rally again, and quickly moved to 1675.08. After another small pullback, the index continued to move higher into the close, topping at 1676.63.

Yesterday I said that I was looking for a move higher, giving a target of 1666, and then expected a small pullback before another move higher. The SPX did open higher, moving slightly higher than my target, but the pullback from that high stopped at 1666.

It would appear that the open to 1671.00 completed the 5^th wave from yesterday afternoon’s 1647.66 low. By my count, that was Wave 3 from 1604.57. The small pullback that followed was most likely Wave 4, with Wave 5 from 1604.57 now underway. I expect this wave to end at 1689-1690. If the SPX moves to this level, I would then expect the 20 point or so correction I spoke of yesterday.

On a cautionary note, the sequence from 1647.66 to 1671.00 contained no complex corrective wave. Often this results in a secondary sequence forming, and such a sequence may have topped this afternoon at 1676.63. If the SPX falls below 1672.77, this would be the most likely scenario. I would expect support to be at 1670, and then 1661.

I am looking for the SPX to move to 1689-1690. Support should be at 1670, and then 1661.

Thank you.

Wednesday's Market 07/10/2013

It was another gap up open…….wait……there WAS NOT a gap up open. That is news in itself for this market. Although the SPX did not gap up, it did open to the upside once again. After hitting 1653.67, the index headed down, dropping to 1648.17. From there the SPX moved slightly higher, chopping its way to 1651.48. After a slight dip, the SPX headed sharply higher, reaching 1657.92. Almost as quickly the SPX dropped, taking out the previous daily low, and falling to 1647.66. A move to 1653.50 followed, and then a pull back to 1650.38 before rising into the close.

After yesterday, I was looking for one more move higher, to 1666, before a pull back. It now looks like I was slightly off. From the 1604.57 low, I had Wave 1 to 1627.06, followed by an inverted corrective wave that completed at 1637.01. I then had the move to 1654.18 as Wave 3. It now appears that only the first 3 waves of that inverted corrective wave completed. The third wave of that sequence ended at 1614.71. The entire move from that low to today’s 1657.92 high completed the fourth wave, with the subsequent drop to 1647.66 finally completing the sequence.

From here I am looking for the SPX to move higher, with the first move having the same target I gave yesterday, which was 1666. After that there should be a small pullback, and then one final move higher before a slightly larger pull back, most likely somewhere around 20 points.

The first wave of this sequence was just over 22 points, 1604.57 to 1627.06. The third wave, 1647.66 to 1666, would be around 20 points. Therefore, after the SPX hits 1666, and pulls back, I would expect Wave 5 to be of that same magnitude.  

Thank you.

Tuesday's Market 07/09/2013

The SPX gapped up at the open today, quickly finding itself at the 1650 resistance level I mentioned yesterday. The index made it to 1649.90 before pulling back to 1643.93. After that low, the SPX spent the rest of the day moving progressively higher, interrupted by only very small pullbacks along the way. By the afternoon, the SPX had reached 1653.49, and by the end of the day 1654.18.

In yesterday’s post I indicated that two waves had now completed from 1604.57 low and possibly four waves of lesser degree by the end of yesterday. The extended move today from yesterday’s 1638.06 low completed a 5 wave sequence at 1653.49, and then a higher degree sequence at 1654.18. This most likely completes the third wave from the 1604.57 low.

The slight pull back at the end of the day may have completed the fourth wave, which would give a 5^th Wave target of 1666. At that point we could see a pullback similar to the 22 point move we saw from 1626.61 to 1604.57. As I mentioned yesterday, I still expect this market to move higher from that point.

Thank you.

Monday's Market 07/08/2013

The SPX started the day with another gap up open, rising above 1640 to start the day. After a brief three point pullback, the move higher continued in stair step fashion, with the SPX hitting 1642.28, and the 1644.68 after falling back to 1640.38. That turned out to be the high of the day, as the index slipped into a protracted pullback that took it down to 1637.01. The trading then turned choppy, with the SPX spending the remainder of the day trading in a trading range from that low to 1642.

This morning’s initial move up to 1644.68 appears to complete a single sequence from yesterday’s 1614.71 low. The first wave of this sequence ended at 1630.44, and was the most complex of the waves. The first 3 waves were straight forward, 1614.71-1619.20-1616.06-1621.51, but were then followed by an inverted corrective wave 4 which terminated at 1623.46. Wave 5 of this initial sequence then ended at 1630.44. From that point, the SPX pulled back to 1623.98. This pull back occurred in three waves, which became the first three waves of an inverted corrective wave 2. This wave completed today on the initial pullback to 1637.61. The entire sequence from 1614.71 then completed 1642.28-1640.38-1644.68.

From that 1644.68 high, the SPX pulled back in a 5 Wave sequence to 1637.01. Off that low, it looks like the index has complete 4 waves thus far.

Looking at the larger picture from the 1560.33 low, I believe the SPX completed a sequence higher at 1626.61, followed by a corrective sequence to 1604.57. A sequence of lesser degree then completed at 1627.06, and was followed by an inverted corrective wave that completed today at 1637.01. If this count proves correct, it would imply much higher prices, as the SPX would need to first complete the sequence from 1604.57, and then the sequence from 1560.33.

I would look for the market to move higher from here, with resistance at with my next target at 1658. Resistance is at 1650, and then 1675.

Weekend Outlook 07/07/2013

On Friday, the market continued the rally off Wednesday’s 1604.75 low. An opening gap up led to a 1627.01 high, and after a slight pullback, the SPX edged slightly higher to 1627.06. After that, the index suffered a pullback, dropping to 1614.71. After that the trading was mostly higher, if not a little choppy. A rally to 1621.51 was followed by a pullback to 1617.45. This, in turn, was followed by another rally to 1626.53, a pullback to 1623.46, another rally to 1630.44, another pullback to 1623.98, and finally a rally to 1632.07.

I had been targeting 1631, and the SPX moved right into that level. I had been targeting this level as the termination point of a 5 Wave sequence from 1560.33, but it appears more likely that the actual end point for that sequence was 1626.61. After the pullback to 1604-1605, the SPX completed a sequence higher to 1627.06, and may have completed another sequence Friday at 1630.44.

The market action from the 1560 low continues to look bullish, and is most likely the beginning of a new uptrend. The next resistance levels would appear to be around 1650, and then 1675.

Thank you.

Thursday 07/04/2013

From the looks of the SPX futures, it is quite apparent that my original count was actually correct. This count, from the 1560.33 low, has the first wave of a 5 Wave sequence completing at 1589.13. An inverted corrective second wave then followed, completing at 1601.06. The third wave of this sequence completed at 1626.61, and was followed by the fourth wave which completed at 1604.57.

From the 1604.57 low, the SPX has thus far completed the first wave of a sequence at 1613.23. Wave 2 was once again an inverted corrective wave, and completed at 1614.82.

My target for the 5 Wave sequence from the 1560.33 low has been 1631, and, again, looking at the futures, it appears that target may be met.

I continue to see this as the first wave of a 5 Wave sequence that will carry the market further, and with that in mind, it is likely that the second wave of this sequence will be an inverted corrective wave. That would most likely mean a shallow pullback, followed by a continuation of this move to the upside.

Thank you.

Wednesday's Market 07/03/2013

The action of the SPX seemingly played out much as I had outlined yesterday, but looks can sometimes be deceiving. The index opened lower as expected, gapping down at the open and dropping straight to 1604.57, right at the 1605 support level. The SPX then rallied to 1610, before dropping back near the morning’s low, but holding just above it. The SPX rose again, this time to 1610.53, and then after some choppy trading rallied in earnest, moving up to 1613, and then 1618.97. From there the index started to drop, falling back to 1614.82 before rising slightly into the close.

Since I was looking for a lower open, with support at 1605, followed by a rally to 1631, today’s shortened action seemed to fit the bill. The only troublesome aspect was the drop to 1604.57 appears to have been a singular move. I had been expecting a 3-4-5 decline to 1605 to complete the sequence from 1626.61. While it is possible that the move was so swift that those last waves occurred beyond the resolution of my chart, but that is an exceedingly rare event. It is more probable that I have misread several waves, and this wave structure is slightly different than I had thought.

This thesis seems to have been confirmed by the action following today’s low. From that low, the SPX completed a 5 Wave sequence at 1613.23, and then after a small pullback, another sequence to 1618.97. From yesterday’s 1616.77 low, we then have 1615.1-1604.57-1613.23-1611.88-1618.97. This happens to complete a semi-inverted corrective wave.

1618.97 would then seem to be the fourth wave from 1626.61, with the fifth wave likely carrying below 1601. I will try to explain the changes in my count in more detail tomorrow, but for now it will suffice to say that it is most likely that 1626.61 marked the end of a 5 wave sequence from 1560.33. So far four waves of a correction from that high have completed, with the fifth wave likely to find support at 1593. At this point I would consider that the end of the corrective phase, and do not foresee a re-test of the 1560 low.

Thank you.

Tuesday's Market 07/02/2013

I mentioned yesterday that today’s first move would most likely be to the downside. That turned out to be the case, as the SPX gapped down at the open, pulling back to 1613.07, but remaining above yesterday afternoon’s 1612.85 low. After that lower open, the index moved higher, fairly steeply at first, climbing to 1621.98 within the first half hour, at which point the trading turned choppier as the SPX churned its way up to 1624.26. This was reminiscent of yesterday’s open, with a steep climb leading to a choppy high. As was the case yesterday, the choppy trading led to a short term top, followed by a sharp decline. Unlike yesterday, however, today’s decline dropped below the previous close, and then continued down to 1606.77. After reaching that level, the SPX tried to recover, moving back up to first 1612.65, and then 1615.01 near the close after a small pullback.

From yesterday afternoon’s 1612.85 low, the SPX completed the first wave of a sequence at 1616.11. This morning’s lower opening then became the first wave of an inverted corrective wave. This inverted correction completed at 1620.39, and was followed by the completion of the sequence from 1612.85 at 1624.26. The first wave of the subsequent decline ended at 1618.07, which was again followed by an inverted second wave, which terminated at 1610.15. The 5 wave decline from 1624.26 then terminated at 1606.77, close to the 1605 support level I spoke of yesterday. From that point, the SPX completed 3 waves higher to 1615.01.

Looking at the entire wave structure from the 1626.61 high, it appears that yesterday afternoon’s decline to 1612.85 was the first wave in a 5 wave sequence to the downside. This morning’s climb to 1624.26 was likely the first wave of an inverted corrective sequence. The decline to 1606.77 was the second wave, with the three waves higher into the close completing the inverted corrective sequence. It is now likely that the SPX will move lower to complete the sequence from 1626.61. I would still characterize this as the fourth wave of a sequence from 1560.33.

I am looking for a lower open to the day tomorrow. I would still expect this wave to end near the 1605 support level. If the index falls below 1601.06, I would need to re-evaluate my count. Up to this point nothing has occurred to alter my view of this being the fourth wave from 1560.33. Wave 1 completed at 1589.13, with an inverted corrective wave 2 completing at 1601.06. Wave 3 then completed at 1626.61. Wave 4 should finish near 1605, and be followed by wave 5 to 1631. Keep in mind that this will in turn be the first wave of a higher degree wave, and second waves are often inverted corrective waves. This could mean a shallow correction, followed by a swift move higher. But I do not want to get too far ahead of myself. For now, the level to watch is 1601.06. Unless that level is broken, I look for a move higher to 1631.

Thank you.

Monday's Market 07/01/2013

I stated in Friday’s post that it appeared the SPX had completed a semi-inverted corrective wave at 1606.24, and that the index was poised to make a swift run up to 1631. The SPX gapped up this morning, and reached 1619.32 before pulling back. That pullback was brief, with the SPX only dropping to 1617.19 before moving higher. The index rose to 1626.18, and then pulled back to 1622.37. From there the SPX chopped its way to a new intra-day high at 1626.61. After that the action was predominately to the downside. First the SPX dropped to 1622.86, and then traded sideways before falling further to 1617.18. Then, after bouncing above 1621, the index dropped to 1612.85 before rising slightly into the close.

I also mentioned on Friday that appeared that the completion of the wave from 1601.06 would be only wave 3 from the 1560.33 low, and that this wave may complete as 1621-1619-1631. Today’s initial move to 1619 was slightly below the 1621 projection, but appears to be Wave 3 1601.06. Wave 4 was the small pullback to 1617.19, and the move to 1626.61 completed the sequence.

After that the index completed a 5 Wave sequence to the downside that completed at 1615.27, followed by a higher degree sequence that completed at 1612.85. This is close to the first support of 1611. This could be the completion of Wave 4 from 1560, with the Wave 5 target still at that 1631 level.

There is some indication that Tuesday’s first move may be to the downside, and if it is, the next support is at 1605. I would fully expect this pullback to hold above the 1601.06 low. Where ever this current Wave 4 ends, it appears the target is still near 1631.

Thank you.