Last Wednesday I said that it appeared that an
inverted corrective wave had completed at 1684.94, and that it was likely that
the market would move higher. Move higher it did, as the SPX gapped higher at
Thursday’s open, and continued to rise until hitting 1707.85, finally clearing
the 1700 level. On Friday the SPX moved lower to begin the day, dropping to
1700.68 before rebounding to reach a new all-time high at 1709.36.
This morning the index opened lower, falling to
1703.55. Again the SPX rebounded, but today it failed to reach a new high,
falling short at 1709.04. The index then dropped to 1704, and then bounced back
to 1707.83 before the close.
Since the opening minutes on Thursday, when the
SPX spiked above 1702, the SPX has traded in a narrow 9 point range between 1700,
and 1709. The most prominent features of this range bound trading have been the
7 point drop at Friday’s open, and this morning’s 6 point drop to open the day.
Since the inverted corrective wave ended at 1684.94, my count has a 5 wave
sequence completing at 1707.85, another at 1700.68, a third at 1709.36, and a
fourth at 1703.55. From 1703.55, the SPX has completed 3 sequences at 1709.24,
1704.32, and today’s close at 1707.24.
For the near term, it appears the SPX is forming
another inverted corrective wave from 1707.85. This would complete at 1703. If
1703 holds, the SPX should rally, with 1718 being the likely target. I still
see this rally eventually carrying the index to a minimum of 1776.
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