On Friday I posted that I was looking for the SPX
to move higher, to 1800, before the next leg of this ongoing decline got under
way. That did not happen, as the index rose slightly at the open, and then went
into free fall throughout the remainder of the day. This means that my short
term count was incorrect, but actually increased the probability that the
medium term count is correct.
I have modified my count beginning with Wednesday’s
1770.45 low. That low would be Wave B of 2 from the 1850.84 high. That would
make the rally on Thursday to 1798.77 Wave C of 2 from that high. From that
point the SPX dipped, and then recovered slightly into the close. I now count that as a Wave 1, followed by a
Wave A of an inverted corrective Wave 2. Wave B then was the steep drop on
Friday morning, and was followed by Waves C, D, and E into the afternoon, which
completed the Wave 2 inverted corrective wave. The SPX then dropped again, in
three waves, into Friday’s close. This can then be counted as Waves 3, 4, and 5
from Thursday’s Wave C high of 1798.77. This 5 wave sequence appears to have
been only the first wave of a larger degree sequence from that high. The small
rise this morning completed Wave A of an inverted corrective Wave 2. This wave
would eventually carry the index down to 1751 with Wave D, and completed at
1757. It then looks like Waves 3, 4, and 5 completed into the close. With a 5
Wave sequence now completed from the Wave C high, it is likely that Wave D
completed today at 1739.66.
While my short term counts have been suspect, the
major points I outlined last Tuesday have remained intact. I had a possible
scenario as 1800-1801, a drop to 1744 followed by a bounce, and then a final
move lower to 1679. On Thursday the SPX hit 1798.77, and was followed by a
decline to 1739.66. I would now expect a rally to complete Wave E, and Wave 2
from 1750.84. I am looking for a minimum of 1762, with an ideal target of 1773
for this rally. From there I am still looking for a further decline to 1679.
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