The SPX continued the decline that began
yesterday, gaping down at the open, and then continuing lower to 1962.59
without a meaningful bounce. After moving up to 1966.08 the index chopped
lower, falling to 1959.46. A more substantial bounce to 1967.56 followed, with
the SPX then fading into the close.
From last Thursday’s 1985.59 high it is now
possible to count a 5 wave sequence to today’s 1959.46 low within the range
needed to complete the next higher degree wave. This count can be seen on the 5
Minute chart. The SPX first completed a 5 wave sequence at 1974.88, which was
followed by an inverted corrective Wave 2. Waves 3, 4, and 5 completed in quick
succession, with Wave 5 completing at 1959.46. A move below 1959.46 would
indicate there is further downside to this wave, but I see the lower limit of
this decline 1937.
Looking at the wave count on the 60 Minute chart,
it appears that the SPX completed a 5 wave sequence from 1814.36 Thursday at
1985.59. Wave 1 completed at 1884.89. Wave 2 was an inverted corrective wave
which completed as 1850.61-1891.33-1862.36-1955.55-1925.78. Wave 3 then
completed at 1968.17 and Wave 4 at 1944.69. After the completion of Wave 4, it
was possible to calculate the range in which Wave 5 should complete. This range
is between 1972 and 1994, so Thursday’s 1985.59 fits nicely as the Wave 5 top.
The 4 hour chart shows that the 5 wave sequence
from 1814.36 that completed on Thursday was Wave D of an ongoing inverted
corrective Wave 2 from 1882.35. The current decline is thus Wave E of that
inverted corrective wave. If the decline is over, the SPX should now go on to
complete Waves 3, 4, and 5 to the upside. This would complete Wave 5 from
1560.33, and complete the sequence from the October 2011 1074.77 low. With 4
waves from the 1560.33 low completed, the Wave 5 range can again be calculated,
and yields 1957-2064 as my current target.
Since this market has been so resilient, and
seemingly unwilling to make any sustained move to the downside, I will continue
to monitor it one wave at a time.
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