The market opened this holiday week with a gap
higher to a new all time high. The holiday mood was short-lived, as the SPX
moved down from that early morning high, and never recovered. The index
completed three waves down from that high at 1803.89, and then tried to
recover. With an hour and a half of trading left, the SPX clawed back to
1807.47, but then quickly moved to new daily lows at 1800.58 before recovering
slightly into the close.
From last Wednesday’s 1777.23 low, the SPX had
completed four waves of a 5 wave sequence to the upside last Friday. The gap
open to 1808.10 completed the fifth wave. Today the index completed a sequence
down from that low.
Widening out to the bigger picture, my count has
the SPX now in wave 5 from the October 2011 low of 1074.77. Wave 4 of this
sequence completed at 1560.33. From 1560, the index has also completed 4 waves,
with that wave completing at 1746.20. From that low, the SPX completed the
third wave today at 1808.10, and possibly the 4th wave at today’s
low of 1800.58.
I have been targeting this wave to complete above
1828, and so far nothing has occurred to change that. In fact, if today’s low
was wave 4, the target for wave 5 would be between 1828 and 1845. It is still
possible for the index to move lower, possibly to 1789, with the 1828 remaining
intact.
My expectation is the SPX should put in a bottom
between here and 1789, and then make one more move higher to between 1828 and
1845. That should complete a 5 wave sequence from the 1074.77 low.
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