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.
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