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.
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