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.
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