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.
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