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.