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.
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