The pullback of the previous three days was all
but erased today, as the SPX gapped higher at the open, and barely looked back.
Yesterday I said that inverted corrective wave had completed at the 1773.23
low, suggesting a move higher. Just as decline yesterday was foreshadowed by a
nested inverted corrective wave scenario, the set up for today’s rally began in
the last hour of trading yesterday. From that low, the index formed a small 5
wave sequence to 1780.95. After a small pullback, the SPX formed another small
wave higher, followed by three small waves lower. This formed a
1-2-3-4-5(1)-A-1-A-B-C sequence. The sharp rise this morning completed wave D,
and the small pullback that followed, wave E, completing the first inverted
corrective wave, and wave 2. Three more waves to the upside, 1790.61-1789.34-1793.38,
completed waves 3, 4, and 5, and in turn wave B of the initial inverted
corrective wave that began yesterday. A swift three wave decline followed,
completing waves C, D, and E, which completed that initial corrective wave, and
wave 2 from yesterday’s 1773.23 low. Three quick moves higher completed the sequence
from the low at 1793.71, right at the 1794 resistance level.
After reaching that resistance level, the SPX
underwent the largest pullback of the day, all of 3 points. This decline
occurred in three waves, suggesting another inverted corrective wave was
underway. After pulling back to 1790.60, the index began to rise again. The
rally from 1790.60 eventually carried the index to 1797.16. This was a 5 wave
sequence with an inverted corrective wave 2. Wave D of this corrective wave
lifted the SPX to 1795.71, with wave E testing that 1794 support at 1794.10.
After reaching 1797.16, the index pulled back again, this time to 1794.35. This
would be within the range of completing the inverted corrective wave from
1793.71, and wave 2 of a sequence higher.
I am looking for this sequence from 1773.23 to complete
somewhere above 1803. This would complete the third wave from 1746.20 low, and
after a brief pull pack would then project wave 5 above 1828.
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