After finally completing a 5 wave sequence from
1709 yesterday, the market took little time deciding on its next move. After a
small bounce yesterday afternoon, the SPX gapped down n a big way this morning.
The index fell below 1670 at the open, and continued lower until it reached
1659. The SPX tried to recover from that point, but could only make it to 1668
before turning lower once again. The index finally hit the low of the day at
1658.59, after tumbling nearly 27 points. From that point the index moved
slightly higher to 1664.58, and then ended the day trading within that narrow
range.
I mentioned yesterday that the SPX had finally
completed a 5 wave sequence from 1709 at 1684.83. The drop today was then part
of an inverted corrective wave that ended at 1667.60, with the index then
completing a higher degree sequence from 1709 at 1658.59. This move invalidates
my longer term count from 1560.33, which I had been viewing as a Wave 1 to
1626.61, and was being followed by an inverted corrective wave. The next most
likely count has three waves completing from 1560.33 to 1709.24, with wave 4 in
progress now. This count would still project a wave 5 high in the 1776 range I
have been mentioning.
The next possibility is that the SPX completed 5
waves from 1560.33 to 1709. This would open up several options, but generally
point to a low above 1560, with an ensuing high around 1776.
The SPX hit extreme oversold readings today, and
so it would not be surprising to see a bounce at any point, but it is likely
that there will be some more movement to the downside.
Support is at 1651, and the 1621, with resistance
at 1669, and then 1685.
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