Thursday, February 27, 2014

Thursday's Market 02/27/2014

The SPX opened slightly to the downside today, but quickly recovered and moved above yesterdays close to 1847.04. This completed a 5 wave sequence following the completion of the semi-inverted corrective wave yesterday afternoon. From there the index again pulled back, falling to 1841.13. After that the SPX embarked on a more sustained rally, completing a 5 wave sequence to the upside at 1854.53. Another pullback, this time to 1849.93 was followed by three waves to the upside as 1853.51-1850.19-1854.13.



Putting today’s action together with the completed waves from 1840.19 reveals that a 5 wave sequence from that low may have completed at today’s 1854.13 close. From that low, Wave 1 completed at 1847.60. A quite complex semi-inverted corrective wave, which I have been describing the past two days, then completed a second wave yesterday at 1840.91. This wave appears to have been Wave A of a continuing Wave 2. Wave B was completed with the opening move higher, and was followed by the drop to 1841.13 which completed Wave C.  The extended rally through the afternoon to 1854.53 completed Wave D, with the pullback to 1849.93 Wave E, and finally Wave 2 from 1840.19. The three quick waves into the close then may have completed Waves 3, 4, and 5.

This count would indicate that a pullback from here is likely. Until the SPX breaks below 1840.19 it is possible for the index to move higher, but with a 5 wave sequence from that low, it appears likely that the next move will be lower. It is also possible that the SPX is still in Wave3 from 1840.19. The upper boundary for the 5 waves completed scenario is only slightly above today’s close, so any move to the upside at the open would suggest this is the case. I would still be looking for a move above 1858.71 to confirm a move higher is underway.




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