Thursday's Market 03/20/2014

It was a benign opening for the SPX given yesterday’s late afternoon fireworks. The index opened slightly to the downside, falling to 1858.46. After trading sideways for several minutes, the SPX broke to the downside once more, this time falling to 1854.63. The mood was decidedly bullish from that point, with the index quickly rebounding to 1868. After dipping to 1862, the SPX rose steadily, reaching 1873, and then traded in a narrow range to 1873.49 before falling back to 1868.33 near the close.

Picking up from yesterday’s count, it looks like the opening move to the downside completed a5 wave sequence from 1864.07, and Wave B of 2 from 1874.14. The rally off that low to 1867.85 completed Wave C, which was followed by a more complex Wave D to 1870.87. The final push higher to 1873.49 completed Wave E and Wave 2 from 1874.14.

The rally from 1854.63 carried slightly further than I had expected, but looks to have completed in an area that keeps my current count intact. This has the SPX in a 1-A-B-C-1-A-B-C-1-2 pattern from 1882.35, the point I consider the termination point of the move from 1837.92. Essentially this a nested wave structure with the bias being to the downside. This count hinges on the SPX remaining below 1874.40, a level which is precariously close at the moment, and which the index has flirted with for three days now. The above scenario still seems to be the best fit for the waves, but again, this count would be invalid if the SPX moves above1874.40.  

Wednesday's Market 03/19/2014

The SPX opened slightly higher this morning, but quickly reversed and dropped the 1870.52 low I had looked at as completing an inverted corrective wave from Monday’s 1862.30 high. This negated that scenario, but did complete the fourth wave from 1856.31, or the second wave from 1839.57. From there the SPX rose to 1874.14, to complete the fifth wave. The index then traded in a narrow range for most of the afternoon, first dropping to 1870.51 before rising again to 1873.75. The quiet trading day ended there, as the FED announcement was not well received. The SPX dropped to 1867, rebounded to 1871.29, and then dropped further to 1863. Another bounce to 1871 failed, and the index fell 1850 before staging another comeback, which took the index to 1864 shortly before the close.

Looking at the SPX from this morning’s 1874.14 high, the drop to 1870.51 can be looked at as a wave 1. The reaction to 1873.75 is the second wave, which is most likely the first wave of an inverted corrective wave. From there the index dropped in three waves, 1867.01-1871.29-1863.27. From 1863.27 the SPX rose to 1870.81, forming Wave A of an inverted corrective Wave 4. Wave B unfolded in a 5 wave sequence down to 1850.35. Three waves higher, 1858.80-1856.89-1864.07, completed Waves C, D, and E, and Wave 4 from 1873.75. Given this count, Wave 5 of the sequence should complete between 1856 and 1846. From there a rebound would be expected for Wave B of 2 from 1874.14.

With the SPX completing today’s wave below 1874.40, the count I have been from the 1882.35 high remains intact. This count has the drop to 1854.38 as a Wave 1, which was then followed by Waves A, B, and C of an inverted corrective wave. It now looks like the drop to 1839.57 was a wave 1 of a lesser degree, which was followed by Waves A, B, and C of an inverted corrective wave 2. This count makes it likely that the SPX is in a complex corrective wave from 1709.36, which has a target of 1758.

Tuesday's Market 03/18/2014

It was another higher open for the SPX this morning, having come off the inverted corrective wave I identified yesterday. The index rose to 1867.36 before taking a slight pause, and then proceeded to 1872.06. This completed a 5 wave sequence from 1856.31. After falling to 1867.10, the SPX chopped its way higher to the high of the day at 1873.76. This completed a 5 wave sequence from 1867.36. The index then made 5 waves lower into the close, completing that sequence at 1870.52.

Looking at this wave from the 1839.57 low, the SPX completed a sequence at 1862.30. From there an inverted corrective wave to 1856.31 followed. The index then completed another sequence at 1872.06 and another at 1873.76. I mentioned yesterday that a more complex corrective wave from the 1862.30 high could be forming, and it appears that is the case. I count an in inverted corrective wave from that high as 1856.31-1872.06-1867.10-1873.76-1870.52. If that is the case, the SPX should continue higher from these levels.

It does appear that the SPX is headed for new highs, but I still remain somewhat cautious. The wave structure from 1839.57 that I outlined above is bullish, but I will take this one step at a time. Yesterday I mentioned the 1874.40 level as being significant, and that is still the case. I will also mention one additional level that may prove important, and that is 1877-1880. A move into that level, followed by a pullback, could be a danger signal. Again I would look at the 60 Minute MACD(13,34) for an indication of the end of this wave. A negative crossover from that level could mean this market has further to go on the downside. This should prove to be an interesting day.

Monday's Market 03/17/2014

The SPX opened higher this morning, bouncing sharply off Friday’s 1839.57 low, and reaching the high of the day of 1862.30 within the first hour of trading. I had mentioned 1861 as a level that might determine whether this bounce would be just that, a bounce, or the start of a move to new highs. I had thought that this would be a small correction that would lead to the next move down, but with the index moving above 1861 the odds now favor the start of a new move higher.

The simplest count for today’s SPX action is a Wave 1 to 1862.30, followed by an inverted corrective wave as 1854.61-1857.96-1853.17-1861.15-1856.31. This is supported by the oversold readings on the RSI(5) for Waves A, C, and E. I would have expected the MACD(13,34) to cross the zero line at Wave E, but it fell just short of that level. This may indicate that this is only the start of a more complex corrective wave, but at the moment this would qualify as a Wave 2.

I am still not completely convinced that the SPX is headed to new highs. There are still several possibilities that would result in the index moving lower, so I will remain cautious at the moment. I would first like to see a move above 1874.40. This was the start of Wave D of the inverted corrective wave I was looking for, and until that level is surpassed it is still possible that the SPX is still in Wave D. The 60 Minute MACD(13,34) might be a good indicator to watch for now. A negative crossover just above the zero line before the SPX gets above 1874.40 could be a bearish signal.

Friday's Market 03/14/2014

Yesterday the SPX continued to move lower from the 1882.35 high. The first move from this high dropped the index to 1854.38, where it completed a 5 wave sequence. The SPX then rebounded in what I see as three waves, lifting the index to 1874.40. The initial drop yesterday to 1845.81 completed a five wave sequence from 1874.40. The SPX bounced to 1852.98 off that low before making a new low at 1841.86, and then moved slightly higher into the close.

This morning the SPX started off slightly lower before higher to 1852.44. This completed an inverted corrective wave from yesterday’s 1845.81 low. After hitting that high, the index moved slightly below yesterday’s low to 1840.36, bounced to 1851.64, and then made a final push lower to 1839.57, completing a sequence from Thursday’s 1874.40 high.

Looking at the entire move from the 1882.35 high, it appears that the SPX completed a Wave 1 at 1854.38. The three waves higher from that point to 1874.40 were the first three waves of an ongoing inverted corrective wave. With 5 waves now completed from 1874.40, there is a good chance that the fourth wave of that inverted correction, or Wave D, completed today at 1839.57. I would now expect the SPX to move higher to complete Wave E, and Wave 2 from 1882.35. From that point I would be expecting a resumption of this downturn.

If the SPX is indeed entering Wave E of 2 from 1882.35, there are several parameters that will define this wave. Since Wave A was greater than Wave C, Wave E can be expected to be greater than Wave A, which was slightly less than 14 points. Adding that to today’s low yields 1853.57, and gives the minimum price for this wave. The ideal price for this wave would be 1858. The maximum level for this wave is 1861. If the SPX moves above 1861 I would have to at least consider the possibility that 1839.57 marked the end of this move.

Thursday's Market 03/13/2014

Although it is still possible that the SPX is still correcting the wave from 1834.44, it is becoming much more likely that the index has completed a wave from 1737.92. If this turns out to be true, the SPX is likely in Wave E of an inverted corrective wave from the August 1709.36 high, which would have a target of 1758.

 When the SPX reached 1878.16 last Friday afternoon, it completed a sequence from the 1834.44 low. I have been looking at the action from that point as a corrective wave. The alternative is that the index made three waves down to 1867.04, and then three waves up as 1879.73-1872.73-1882.35. This would have completed an inverted corrective wave from the 1858.71 high as 1834.44-1878.16-1871.59-1877.86-1867.04, and in turn a 5 wave sequence from the 1737.92 low as 1858.71-1867.04-1879.73-1872.73-1882.35.

From that high, I see a complete sequence to 1854.38, followed by three waves up to 1874.40. This is likely part of an inverted corrective wave that has yet to complete. Today the index completed a sequence to 1845.81, and then rebounded to 1852.98, before completing another sequence down to 1841.86. With a sequence from 1882.35 not yet complete, this market should have further to go on the downside.

In the short term, resistance is at 1853, and then 1863. If the SPX gets much above 1863, this all may have been a corrective wave from 1878.16. Near term support is just below today’s low of 1841.86.

Wednesday's Market 03/12/2014

Yesterday I said a move below 1863.88 would likely mean an end to the wave from 1737.92. Today the SPX moved below that at the open, falling to 1854.38, but did so in a manner that seems to leave intact the recent rally.

My count has Friday’s 1878.16 completing a 5 wave sequence from 1834.44. This was followed by a semi-inverted corrective wave that I thought had completed yesterday at 1863.88. When the SPX dropped to 1858.08 at the open, and then bounced to 1860.93, another possibility revealed itself. Wave C of the semi-inverted corrective wave completed yesterday at 1868.51, and I then counted the move to 1873.69, and then 1863.88 as Waves D and E. Looking at the entire sequence from 1868.51 to 1860.93, 1873.69-1863.88-1868.41-1858.08-1860.93, it became apparent that Wave D was an inverted corrective wave, which completed at 1860.93. The final drop this morning to 1854.38 then completed the semi-inverted corrective wave from 1878.16.

I continue to look at the wave from 1560.33 as the final wave from October 2011 1074.77 low. The wave from 1560.33 has likely completed four waves thus far. The first wave ended at 1709.36, and was followed by an inverted corrective wave which completed at 1646.47. Wave 3 carried the SPX to 1850.84, and Wave 4 ended at 1737.92. From 1737.92 the SPX looks to have completed two waves at 1858.71 and 1834.44 respectively, and now Waves 1 and 2 of 3 at 1878.16 and 1854.38. I continue to look for Wave 3 from 1737.92 to complete above 1909, and the complete sequence from that point above 1957, with an optimal target of 2001. A drop below today’s 1854.38 low would likely mean my alternate scenario is in play.

Tuesday's Market 03/11/2014

The wave I have been tracking from the March 3^rd 1834.44 low got off to a rousing start. The SPX quickly rose to 1876.23, but then lost momentum while moving to 1883.57. From there the index dipped to 1867.04 on Monday, and then tried to test the high this morning, but failed, topping out at 1882.35. The rest of the day found the SPX falling steadily, dropping to 1863.88 before recovering into the close.

I had been looking at the degree of this wave to be equivalent to that of the 1737.92 to 1858.71 wave, and had put a minimum price of 1909 on it. The wave from 1834.44 started with a move higher to 1848.54 for Wave 1. The pullback to 1840.43 that followed I count as Wave A of 2. Wave B encompassed the remainder of the move higher, completing at 1883.57. Waves C, D, and E of two then followed, bringing the SPX down to 1870.56. From that low the index moved higher in three waves to 1878.16, which complete Waves 3, 4, and 5, and completed a sequence from the 1834.44 low.

Since completing that sequence the SPX has been in another extended corrective wave, much as it did after reaching the 1858.71 high. This corrective wave has also been comprised of a semi-inverted corrective wave, as was the case following the 1858.71 high that contained within it another semi-inverted corrective wave. Wave A of this wave ended at 1867.04 and Wave B at 1879.73. Wave C itself took the form of a semi-inverted corrective wave, and completed at 1868.51. Wave D followed at 1873.69, and Wave E at today’s low of 1863.88. From there it appears the SPX rose in a 5 wave sequence to 1868.41, and was followed by three waves to the downside.

Normally only one corrective wave in a sequence is a complex wave, so give the fact that Wave 2 from the 1737.92 low, and the recently completed corrective wave are complex, it is likely that they are of different degrees. This means that the wave sequence from 1834.44 to 1878.16 was only wave 1 of 3 from 1737.92, and not the entirety of Wave 3. I am still looking for Wave 3 to complete above the 1909 level.

From today’s low of 1863.88, the SPX formed a 5 wave sequence to the upside, followed by three waves lower. The three waves lower are likely part of an inverted corrective wave, and I would be looking the index to continue higher from here.

At this point, if the SPX moves below 1863.88, there is a good possibility that something completely different is going on. My alternate count has the index in an inverted corrective Wave 2 from the 1560.33 low. A move below 1863.88 would indicate that the SPX has begun Wave E of this corrective wave, and could be headed much lower.

Tuesday's Market 03/04/2014

The SPX opened substantially higher today, moving up to 1867, and then after a small pullback continued higher to 1871.44. From there the index made two slightly higher highs at 1873.27 and 1873.60, separated only by very minor pullbacks. The SPX then pulled back all of five points before moving to a new high at 1876.23.

While there are still several counts that are possible, it is looking more and more like the SPX is in Wave 3 of 5 from the 1560.33 low. Wave 5 began at the 1737.92 low, with Wave 1 completing at 1858.71, and possibly Wave 2 yesterday at 1834.44. Yesterday I counted a 5 wave sequence to 1846.98, which was followed by a semi-inverted corrective second wave which completed at 1840.43. This looks like Wave A of an inverted corrective wave. The higher open today and the formation of the three successive highs completed a sequence for Wave B. Wave C was the 5 point pullback that followed, and Wave D the final high of the day. Wave E should finish somewhere between the closing price and 1869. A move slightly lower, bringing the RSI(5) on the 5 minute chart to oversold levels would fit perfectly. The SPX should then move higher, completing Waves 3, 4, and 5 to the upside. This should complete Wave 3 from the 1737.92 low. I would look for this wave to complete above 1909.

The count from the 1560.33 low requires the wave sequence from 1737.92 to complete above 1957. In order for that to happen Wave 3 must complete above 1909. These are not targets, simply minimum requirements. The ideal target for this wave remains 2001. If this wave completes beneath 1909, it would indicate that something else is happening.

A move below 1868 would put the short term count in doubt, but not the longer term count. For the longer term count to be invalidated, the SPX would need to move below 1834.  

Monday's Market 03/03/2014

The SPX suffered a gap down opening today, dropping to 1844 at the open. After a small bounce the index moved lower still, stopping right at the important 1842 support level. That support only held momentarily, as the SPX continued to lose ground, this time hitting the low of the day at 1834.44. An attempted recovery followed, taking the index first to 1846.98, and then 1848.54 before pulling back to 1840.43. From there the SPX moved slightly higher into the close.

Over the last several days I have described a few different paths that this market may take. Looking at the SPX from the 1737.92 low, I see a 5 wave sequence completed at 1858.71, followed by a pull back to 1840.19. After that the index formed another 5 wave sequence to Friday’s 1867.92 high. Friday afternoon the index completed a wave at 1847.67, and then rose to 1860.68. That rise looks to be Wave A on an inverted corrective wave that completed this morning at 1847.40, and was then followed by a completed wave at the low of 1834.44. So from the 1858.71 high the market has completed 5 waves as 1840.19-1867.92-1847.67-1847.40-1834.44. This satisfies my model for a semi-inverted corrective wave from the 1858.71 high.

The SPX has formed quite a few of these semi-inverted corrective waves lately. Although normally rare, these seem to form in periods of indecision, which is exactly what we have seen lately.  Assuming those is an inverted corrective wave, the scenario showing 1867.92 as a completed 5 wave sequence from the 1646.47 low can now be discounted. It still appears that there are two options in play. The first has 1858.71 as Wave 1 of 5 from 1560.33. This would be the more bullish of the two scenarios. The second option has the move from 1737.92 as Wave D of an ongoing inverted corrective wave from 1709.36. Again, the index would be in Wave 2, but would most likely complete lower than the first scenario.

Shorter term, with a semi-inverted corrective wave completed, I would expect the SPX to move higher, but there may be limited upside, with resistance at 1865 and then 1875. It is also possible, as happened with last week with the same type of wave, but at a lesser degree, that this is only the first wave of a larger corrective formation. Support remains at 1819.

Sunday 03/02/2014

On Friday I presented two scenarios for the SPX. The first involved the index moving back up to 1867-1870 to complete a 5 wave sequence from the 1737.92 low. The other had the SPX dropping to 1842 to complete an inverted corrective wave from the 1858.71 high. The first scenario would be followed by a pullback; the second would point to higher prices ahead.

Over the weekend I have noticed a third possibility. This one looks at the SPX from what I have labeled as Wave 2 at 1646.47. From that point the index completed a 5 wave sequence at 1850.84. A pullback to 1737.92 followed, also a 5 wave sequence. A third sequence completed at 1858.71. After dropping to 1840.19 the SPX completed another sequence at 1867.92, which I discussed this week. I had been looking at the move from 1737.92 as the start of a new wave, of which the move to 1850.84 was only the first wave. It is possible that the move from 1646.47 to 1867.92 is all part of wave 2. The sequence 1850.84-1737.92-1858.71-1840.19-1867.92 satisfies my model, and thus could mark the end of Wave 3. If this is the case, the targets for the next pullback would be 1819 and then 1749.

I would still be looking at 1867-1870 and 1842 as important areas of support/resistance. As I mentioned on Friday, the target range in both cases is very narrow. If the SPX breaks above 1867-1870, it would indicate that the index could move substantially higher. If the SPX moves below the previous 1840.19 low, I would think that the scenario that I laid out is in play.

Friday's Market 02/28/2014

I had thought that a break out in one direction or another would provide some clarity. The SPX provided a breakout, but unfortunately not much clarity. I am a little limited on time today, but I will post my current counts and try to give some narrative. I will try to address it in more detail over the weekend.

On Thursday the SPX completed a semi-inverted corrective wave from Tuesday’s 1847.60 high. That does not seem to complete the entire corrective wave however. The SPX broke higher this morning, indicating a further move to the upside as I explained yesterday. After completing the semi-inverted corrective wave, the SPX formed two additional waves before the close. This morning the index move slightly higher, and then pulled back, forming waves 3, and 4. Then the rally ramped up, and the index rose to 1860.69, completing a 5 wave sequence. An inverted corrective Wave 2 followed, and then Waves 3, 4, and 5 took the SPX to 1866.16. I see this as a single completed wave from the completion of the semi-inverted corrective wave yesterday. The index then pulled back in three waves. I believe this to be the completion of the very complex Wave 2 from Tuesday’s 1847.60 high. The index then moved slightly higher, which appears to complete Waves 3, 4, and 5, finishing a sequence from 1840.19. After that the SPX decided to throw a curveball. The index plummeted from the 1867.92 high back to 1848, and then tried to recover, bouncing back to 1860.68.

Again, I will try to address this in more detail, but for now there are a couple of scenarios. Looking at the count from the 1737.92 low, the SPX completed the first wave at 1858.71. The pullback to 1840.19 may have been Wave 2, today’s 1867.92 high Wave 3, and today’s drop to 1847.67 Wave 4. This would give a Wave 5 target of 1867-1870. This is a very narrow range, so it would need to land almost exactly at that level. Another option is that the SPX is forming an inverted corrective wave from the 1858.71 high. The drop to 1840.19 would be Wave A, today’s high Wave B, followed by the drop for Wave C. Wave D may have then completed at the bounce back 1860.68 high, giving a target for Wave E of 1842. Otherwise Wave D may still be in progress. Right now it looks like 1868 and 1842 are the points to watch.