It was a fitting end to a rollercoaster week that
saw the SPX sell-off Monday, Tuesday and into Wednesday, rally sharply into
Wednesday’s close, and then plunge on Thursday. Having completed a 5 wave
sequence from Wednesday’s 1999.79 high at the close on Thursday, it was likely
that the index would bounce at the open. It did just that, moving higher at the
start of trading to 1972.16. The morning was choppy, as the SPX then fell to
1969.16, rose to 1975.69, and then moved lower again in three waves to
1969.80-1974.15-1967.92. The first three moves can be seen as Waves 1, 2, and 3
of a 5 wave sequence higher, and the last three as Waves A, B, and C of an
inverted corrective Wave 4. Wave D turned out to be the bulk of today’s rally,
as it drove the index higher to 1986.37. That was followed by one more pullback
to 1981.07 that completed Wave E, and thus Wave 4. If correct
this would mean a continuation of the rally on Monday, with a minimum Wave 5
target of 1990.
Where this Wave 5 concludes could provide some
important clues as to the next larger move. The key price to watch is Wednesday’s
1999.79 high. If this wave terminates below that level, it is likely part of a
complex corrective wave from Wednesday’s 1978.63 low. This could take several
forms, and possibly conclude between 1999.79 and 2019.26. If current wave concludes
above 1999.79, this may be the start of a larger move to new highs. I will try
to elaborate on these scenarios over the weekend.
No comments:
Post a Comment