Tuesday, May 20, 2014

Monday's Market 05/19/2014

The SPX started the day by moving lower; a gap down, and then a continuation down to 1872.42. This was a larger pullback than I had anticipated, as I had thought that Wave 4 from 1862.35 had either completed, or was close to completing near Friday’s close. From there the index rose in a somewhat choppy fashion to 1881.66. I had given 1887 as the target for the completion of Wave 5, but the pullback this morning altered that target. It now looks like 1881.66 completed Wave 5. The SPX pulled back slightly from that point before climbing to 1884.89. Another choppy pattern developed through the afternoon, which ended at 1882.58. A final move higher pushed the index to 1886 just before the close. It appears that the SPX completed a larger degree wave from the 1862.35 low to today’s 1886 high as 1881.66-1879.60-1884.89-1882.58-1886.


The SPX still seems to be indecisive, leaving open several possibilities. As I mentioned on Friday, there is resistance at 1893-1894. A move to that level, followed by a pullback, could result in a drop back to the 1850 level. As I also noted on Friday, sometimes a sequence will terminate slightly below a resistance level so the next move can gap over that level. A move above 1894 most probably means a run up to 1924-1925.


With the completion of a 5 wave sequence today there is one other possibility. The choppiness of late is either result of nested waves, which is my current count, which should result in a more extended wave, or the result of complex corrective waves forming. With this in mind a pullback from these levels to 1852 would complete one of those complex corrective waves, and clear up some of the uncertainty in the wave counts. As far as that goes, a move to 1893-1894 followed by a pullback to 1863 would clear things up even more. I continue to this as the 5th wave from 1560.33, which should conclude above 1957 and complete the entire wave from 1074.77.

For the moment resistance is at 1893-1894, and then 1924-1925. Support is at 1852.




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