The SPX started slightly to the downside, dropping
to 1868.46 before rallying to 1872.53. This was just above yesterday’s 1872.43
high, and completed a 5 wave sequence from 1837.49. It was not surprising that
the sequence completed just above yesterday’s high considering the extent of
yesterday’s run-up, and the extreme overbought conditions it created. A pullback
at some point was expected, however the extent and speed of it was. Once the
sell-off started, it continued nearly unabated to 1840.03. From there the first
semblance of a rally appeared, and the index moved up to 1847.55. Another wave
of selling took the SPX down to 1830.87 before another rally moved the index to
1839.12. The SPX then sold off into the close, dropping to 1833.42.
When the SPX fell to 1837.49 last Tuesday, it
appeared the correction from 1882.35 was finally over. While that may still be the case, today’s
action keeps open a couple of scenarios that seemed to have been relegated to
back up status.
I will try to take this one step at a time, so I
will start from the current move from today’s 1872.53 high. The SPX completed a
5 wave sequence to the downside at 1840.03. From there the index rallied just less
than 8 points, fell to 1830.87, and then staged a rally of just over 8 points. If
the SPX opens lower, it would complete a 5 wave sequence at 1828. If the index
opens to the upside, it would complete an inverted corrective wave at 1841. This
sets up my first support, and resistance levels. The first scenario could mean
an end to the current decline; the second would indicate further downside
ahead.
Moving out to my current view that the SPX is
currently in a wave 5 from the June 1560.33 low, Wave 1 of 5 would have
completed at 1882.35. It is now apparent that the sequence to 1837.49 was not
the end of the decline from 1882.35, but could be the beginning of an inverted
corrective wave with the decline to 1837.49 as a wave A, the rally to 1872.53 a
wave B, with wave C currently underway. Support for this scenario would be
1827, and then 1803. This scenario would result in higher prices, with the
minimum target being 1957 as I have mentioned.
The second possibility is that the SPX is still in
an inverted corrective wave from 1709.36. This has been my alternate scenario,
and would target 1758.
Are you going to update, it has been awhile since you posted, thanks!
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