Similar to yesterday, the SPX moved slightly
higher at the open, and then quickly rolled over. After falling to 1691, the
index bounced back to 1694 before falling further. This downside action, with
small bounces continued until the SPX had fallen to 1684.92. From there it
bounced to 1689.50 before falling once again into the close, holding just above
the 1684.92 low.
This market has been frustrating since the 1709
high in the sense that it had not completed a clear 5 wave sequence from that
point. Although the SPX had reached a level where an inverted corrective wave
from 1626.61 had likely completed, it was difficult to know exactly where in
the count the market was. Compounding that fact, the inverted corrective wave
could possibly have completed in two distinct ways, one requiring a 5 wave
sequence from 1709, and the other needing 3 waves from that high. Today, for the
first time, I can count a 5 wave sequence from that high.
I chose to show the 5 Minute chart today since it
shows the whole structure from 1709. The SPX first completed a wave 1 at
1704.32. This was followed by an inverted corrective wave 2 that completed at
1700.18. Wave 3 completed at 1688.38, and was followed by another inverted
corrective wave, this time for wave 4, which completed at 1696.81. Wave 5 then
completed today at 1684.83.
This sequence completed within the area needed to
complete an inverted corrective wave from 1626.61. 1676 is the lower limit of
this completion zone, so if the SPX falls below that level, I would be looking
for further downside. It is still possible that this only completes Wave C of
that inverted corrective wave, which means we should see a rally, followed by
another pullback similar in magnitude to this one. A move above 1709 would
signal a resumption of the uptrend, which should carry to a minimum of 1776.
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