An unexpected consequence of today’s market action
was the somewhat surprising reprisal of the semi-inverted corrective wave from
1687 scenario. I had discounted this over the past several days based on the
minimum projection of 1693 for the wave from 1627. Today’s development once
again makes this scenario possible, if not probable. I originally presented
this scenario in this post: http://5wavemodel.blogspot.com/2013/08/fridays-market-08162013.html.
The SPX gapped higher to open the day, hitting
1661.81 before backing off. The sell-off was pretty steep, with the index
shedding over 21 points in less than half an hour. After dropping to 1640.62
the SPX began to recover. The index rallied to 1661.46, then pulled back to
1657.63. Another push higher took the SPX to 1664.83, where it began to
sell-off once again. The index fell to 1654.45 just before the close.
It would now appear that this morning’s 1661.81
high marked the end of a 5 wave sequence from Tuesday’s 1633 low. My call of
yesterday’s 1659.17 high being the end of that sequence would seem to have been
premature. Following that high, the SPX fell to 1640.62, which is where the
unexpected consequence comes in. That low completed an inverted corrective wave
from last Wednesday’s 1641.18 high. This wave completed as
1628.05-1651.35-1633.41-1661.81-1640.62. This makes it at least possible that
the SPX could complete a 5 wave sequence from 1627.47 within the 1680-1687
range necessary for the semi-inverted corrective wave scenario to remain in
play.
I had been counting the wave from 1627.47 as a
wave 1 to 1641.18, a semi-inverted corrective wave 2 that completed at 1628.05,
followed by a wave 3 to 1651.35, and a wave 4 to 1633.41. This would have
projected wave 5 to complete at a minimum of 1693. If the SPX moves above 1687,
it invalidates this scenario. It is now clear that the semi-inverted corrective
wave was a wave A of 2.
It would have been better for this scenario if the
SPX had stopped at today’s second high of 1661, and then pulled back. This
would have projected a wave 5 right into that 1680-1687 range. If wave 3 of the
sequence from 1627 was indeed today’s 1664.83 high, the market would need to
correct further than the 1654.45 low we saw just before the close. However, it
does appear that the SPX completed a 5 wave sequence from 1665 at 1654.45. If
this is wave 4, it would again project a wave 5 above 1687.
The other scenario I have discussing has the SPX
in the process of completing a 5 wave sequence from 1560.33 as
1709.24-1627.47-1745-1680-1773. I discussed this scenario in detail here: http://5wavemodel.blogspot.com/2013/09/wednesdays-market-09042013.html.
It appears that the SPX has at least one more move
higher in mind, with 1680-1687 setting up to be the battleground. A move into
that area, followed by a break to the downside would indicate a move to
1530-1560 is underway. A move above 1687 and the SPX should continue higher to
1745.
I will try to address this in more detail over the
weekend.
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