The SPX opened virtually flat this morning, but
quickly resumed its march higher, as the market rose to 1659. From there the
index traded in a narrow range, dropping to 1654.55 by late morning. The SPX
rose from that point to 1658 just before the last hour of trading. The index
then slipped into the close, dropping below the previous low to 1654.49 just
before the close.
It appears that today’s high of 1659.17 completed
a 5 wave sequence from the 1633.41 low. The SPX looks to be in the third wave
down from that high, which would indicate some further down side may be ahead. Short
term support is at 1651, 1648, and then 1640.
Given my outlook for a move to 1745, it is also
possible for the three waves down to be part of a complex correction. If this
turns out to be the case, I would expect a move to the 1669 resistance area
before a pullback.
While the
very short term direction of the SPX is difficult to discern at the moment, I
am still looking for higher prices, with 1745 as my first target. At this
point, only a break below 1627 would change this.
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