Monday, February 24, 2014

Monday's Market 02/24/2014

The SPX opened higher today, hit 1845.50, had an ever so slight pullback, and then continued higher to 1851.55. From there the index pulled back to 1849.24, and then rose steadily until it reached 1858.71. After that the SPX dropped to 1856, bounced slightly, and then gained momentum to the downside into the close.


Picking up the count from the weekend, I will make one small change to the short term count from 1824.58. As I discussed over the weekend, a 5 wave sequence completed at 1842.79. The change would be the move from there to 1846.13. It now appears that from 1842.79, the index formed an inverted corrective wave, and then completed a higher degree sequence at 1846.13. That high would be Wave 3 from 1737.92. Wave 4 then completed near Friday’s close at 1835.60. The move today can then be counted as 5 waves from that low, 1845.50-1844.09-1851.55-1852.15-1858.71. This would appear to be the 5th wave from the 1737.92 low.


Assuming a 5 wave sequence from 1737.92 has completed, this could either be Wave 1 of 5 from 1560.33, or Wave E of an inverted corrective Wave 2 from 1560.33. In the first case I would expect support at 1815, and then 1775. In the second case, I would be looking at a target of 1743. To confirm one of these two scenarios is in play, I would like to see the SPX fall below 1835.60.

A rise above 1858.71 at this point would mean either that Wave 1 is still ongoing, or that Wave 2 has completed. If Wave 1 is still underway, it is possible that the index has just completed the fourth wave from 1824.58, or the Wave 2 low. 1846.13 would then be Wave 1 of 3, with either waves 2, 3, and 4 completed into today’s low, or an inverted corrective wave under formation. With the similarity in the pullbacks from 1846.13 to 1835.60 and 1858.71 to 1847.96, this is a possibility. On a move above 1858.71, 1873 would be the next resistance.



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