Wednesday, July 16, 2014

Wednesday's Market 07/16/2014

Today started with a gap up which saw the SPX reach 1983.94 within the first ten minutes of trading. That turned out to be the high for the day as the index reversed quickly and gave back most of its gains, falling back to 1975.67. The SPX tried to rally back into the afternoon, but after reaching 1982.45 it reversed again, fading into the close.


I have relabeled the advance which began yesterday afternoon. It now appears to have been only part of a 5 wave sequence which concluded with this morning’s high at 1983.94. From that high it looks as if the SPX completed a sequence down to 1975.67, and then a sequence higher to 1982.45. I continue to see this as an incomplete advance from 1952.86, with the first wave of the sequence ending at 1969.84. The SPX then looks to have completed Waves A, B, and C of a continuing inverted corrective wave, with Wave C completing at 1959.63. The SPX now appears to be in a complex Wave D. There a many ways this can complete with the given wave structure, but I will outline the two most obvious ones at this point. I have added support and resistance levels from these two scenarios on the 5 Minute Chart. Again, these are simply the two most obvious of many short term scenarios.

Yesterday morning’s 1982.52 high can be counted as Wave 1 of D. The decline to 1965.34 can then be counted as Wave 2 of D, or Wave A of an inverted corrective Wave 2 of D. This morning’s high is then Wave 3 or B, the 1975.67 low Wave 4 or C, which then leaves us with the advance to 1982.45. If this turns out to be Wave D of 2, the Wave E low can be projected to be 1964-1966. 1982.45 may also turn out to be Wave 1 of 5 of D from 1959.63. If the first 4 waves of Wave D have completed as outlined above, 1982.52-1965.34-1983.94-1975.67, Wave 5 would project to 1986-1987.

To recap, with the given wave structure, there is support at 1964-1966. This would complete Wave 2 of D, and clear the way for a further advance. Resistance is at 1986-1987, which would complete Wave D of 2 from 1952.86. I would then look for a decline to perhaps 1975 to complete Wave E, and Wave 2.

Both of these are very narrow ranges, which opens the possibility that the SPX may clear them. A break above 1986-1987 would be bullish, and a break below 1964-1966 would not only be bearish, but might put my current count from 1952.86 in jeopardy.




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