I will apologize in advance for this being a brief
update. It was a very long day at the paying job, with another one on tap for
tomorrow. I did however; want to comment on today’s market.
Yesterday I outlined two possible scenarios, one
bearish, and the other bullish. The bearish scenario would come into play with
a break below 1952.86, which did not happen. At least not today that is. Looking
at the SPX from yesterday’s 1955.59, there was a small move to 1959.95 before
the close, and then a slight dip. Today the SPX opened higher, and completed a
5 wave sequence from the slight dip (1957.68) at 1974.06. After reaching that
point, the index chopped its way to 1971.80, and then completed another
sequence higher at 1979.81. This was followed by a small pullback to 1976.64.
The three small pullbacks, 1959.95-1957.68-1974.06-1971.80-1979.91-1976.64, can
then be counted as an inverted corrective wave. The result is a Wave 1 to
1959.95, followed by an inverted corrective Wave 2 that completed at 1976.64.
This would suggest a continuation of the advance from 1952.86.
From 1952.86 Wave 1 completed at 1969.84. Wave 2 was
the very complex semi-inverted corrective wave that completed yesterday at
1955.59. In my model, waves are proportional dependent on the starting point of
the wave. With the shortness of Wave 1 from 1955.95 to 1959.95, it seems likely
that Wave 3 will be longer than that, and Wave 5 longer still. Wave 1 from
1952.86 was about 17 points. The current wave from 1955.59 is already over 24
points, and should eventually be even longer. If this is Wave 3, it would
project Wave 5 to be extremely long. Given this it seems likely that the entire
move from 1969.84 to 1955.59 was a Wave A of an even more complex corrective
Wave 2. This would have the effect of tempering the length of the entire wave
from 1952.86. I will keep an eye on this going forward. I will try to update
again over the weekend at some point.
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