Tuesday's Market 02/11/2014

It was “another day, another twenty points to the upside” for the SPX. I will be the first to admit that my count since the SPX reached 1740 has been somewhat suspect. Following today’s action it became readily apparent that I needed to re-evaluate my count from the 1850.84 high. I have spent much of the night doing just that, and have adjusted my counts accordingly. Although my count from 1850.84 has changed, my outlook remains the same. I continue to count 1850.84 as the completion of a 5 wave sequence from the October 2011 1074.77 low. This does not, however, complete a sequence from the 666.79 low.

I still think the bull run from the 666.79 low has further to go, and I was expecting a correction to 1679 before a resumption of the move higher. Although there are several different scenarios from 1850.84, I will save that for a later date. At the moment I will concentrate on the shorter term count from that point.

From 1850.84, the SPX made an initial drop to 1835.23. I still consider this Wave 1. After bouncing higher to 1849.31, the index fell sharply over the next two weeks to 1737.92. This has been the perplexing move, as the fell steeply at points, and then went into very choppy periods. I had some trouble deciphering and tracking all the moves. I now believe this entire move was one single 5 wave sequence. So from the 1850.84 high, I have 1835.23 as Wave 1, the bounce to 1849.31 as Wave A of an inverted corrective Wave 2, followed by Wave B of 2 to 1737.92. It appears that Wave C completed at 1798.03 and Wave D at 1792.01. Today’s high of 1823.54 falls within the range to complete Wave E, and thus Wave 2, although 1831 would be the upper boundary for this wave.

This count still implies further downside, and I will keep my target of 1679. A move above 1831 would invalidate this count, and at that point I would have to consider the next move to new highs started at the 1737.92 low.