Thursday, July 18, 2013

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.


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