Thursday's Market 09/12/2013

The SPX opened slightly higher this morning, moving up to 1689.29 before pulling back. After falling to 1685.71, the index turned higher, reaching 1689.97. After that, the SPX spent the rest of the day working its way lower, falling to 1682.30, and then bouncing to 1687.39 before falling back to 1681.96 just before the close.

Today’s 1689.97 high appears to complete the sequence from the 1654.45 low. The possible inverted corrective wave 4 I mentioned yesterday seems to have been incorrect, with the SPX actually completing a smaller degree wave sequence from 1678.29 to today’s high. From 1627.47 the market has now completed a sequence to 1641.18, which I see as Wave 1, followed by a complex corrective Wave 2 which completed at 1640.62.

From there I had been counting 1664.83 as Wave 3, 1654.45 as Wave 4, with Wave 5 possibly completing above 1683. With a 5 wave sequence from 1654.45 having now completed, it is possible that the SPX has reached at least a short term high. However, the entire move from 1640.62, Wave 2 from 1627, until today’s low at 1681.96, looks technically like a single wave. This would fit the inverted corrective wave scenario I spoke of yesterday, or the move from 1640.62 to 1654.45, was of a lesser degree than the move from 1627 to 1641.18. At the moment this scenario seems more likely.

This is supported by the move from 1664.83 to today’s low counting as an inverted corrective wave of some degree. This would mean the SPX should move higher off today’s 1681.96 low. This wave could possibly carry to 1676.70, but would more likely move higher from the open.

If the SPX moves below 1676.70, it would be most likely that a top from 1627 has been put in at 1689.97, and a pullback would then be expected. I think it more likely that the SPX will continue higher from this point, with 1745 remaining a likely target.

Support is at 1685, 1669, and then 1651.