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.
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