Wednesday's Market 10/29/2014

Tuesday's Market 10/28/2014

The SPX opened higher, moving up to 1973.35. After pulling back to 1969.02, the index resumed its climb. These first two moves were consistent with the targets given yesterday. From that point the SPX strayed slightly from my forecast, as the wave became more complex than expected. Since Wave 2 of the wave from the 1951.37 low was a complex inverted corrective wave, I expected Wave 4 to be a simple wave. It looks like it instead was also an inverted corrective wave, which carried the index to 1983.68 before completing at 1980.35. The final move higher today likely completed the sequence from 1951.37.

Short term the SPX could experience a pullback at the open tomorrow, with support at 1979, and then 1964. If 1979 provides support, the upside target from there would be 2010. If the index falls back to 1964, 1996 would be my target.

Monday's Market 10/27/2014

The SPX has been rallying since it hit a low of 1820.66 on October 15^th. The index made an initial move to 1869.00, which I am counting as Wave 1 of a 5 wave sequence to the upside.  From there the SPX pulled back to 1835.02. This looks to be Wave A of an inverted corrective Wave 2. As is often the case, Wave B of this inverted corrective wave has been the most powerful to this point. This wave carried the SPX up to 1949.31. Another pullback to 1926.83 followed which I have labeled Wave C of 2. Wave D is currently underway, with a target of 1975. After this wave completes, the SPX should pill back once more to complete Wave E, and the inverted corrective Wave 2. This pullback should be proportional to the first two pullbacks, with the first being 34 points, and the second 22 points.  This last pullback should therefore be slightly less than 22 points, and I currently have a target of 1956. After that the SPX should move higher to complete Waves 3, 4, and 5.

Shorter term, the SPX from the 1926.83 low completed the first wave at 1961.95. Wave 2 completed this morning at 1951.37. I am looking for Wave 3 to complete at 1970, Wave 4 at 1967, and Wave 5 at 1975. If this plays out, the move lower to 1956 discussed above would follow.

Thursday's Market 10/23/2014

The SPX moved higher from the opening bell today, rising to 1849.56. After a small pullback the index rose first to 1953.09, and then 1957.65. The first substantial pullback followed from that point, as the SPX fell to 1951.82. After that one more move higher occurred, taking the index to 1961.95. From that point the SPX began to pullback in earnest, falling to 1949.11 before bouncing back to 1955.15. One final move lower took the index down to 1948.12 shortly before the close.

As I discussed yesterday, the SPX completed a 5 wave sequence from the 1835.02 low yesterday at 1949.31. This looks to be the first wave of a larger degree sequence from that low. The first three waves of an inverted corrective Wave 2 occurred yesterday, with today’s rally completing the fourth wave.  The current decline looks to be the fifth wave.

Given this count the SPX should continue lower tomorrow, with a target of 1935-1933. After that I would look for a continuing of the advance from 1835.02, with a target of 1980.

Wednesday's Market 10/22/2014

The SPX did not hit y target price of 1960-1985 today, and then dropped below 1929.35, the point at which I said would invalidate my short term count. Given those facts, it is most likely that a 5 wave sequence from 1877.55 completed today at 1949.31 as 1877.55-1896.60-1891.55-1834.30-1929.3.5-1949.31. This also may have completed a sequence from 1835.02 as 1835.02-1867.82-1852.17-1898.16-1877.55-1949.31. If so, the next thing I would be looking at is an inverted corrective wave from the previous high, or 1869.00. The pullback from today’s high took the form 1935.24-1941.24-1926.83. The five waves from 1969.00, 1835.02-1949.31-1935.24-1941.24-1926.83, falls just shy of the requirements for a completed 5 wave sequence.

Yesterday I said that the SPX may undergo a substantial pullback once it completes the current wave. That now does not appear to be the case. If the SPX moves higher from this point, the sequence from 1835.02 is extending, pointing to higher prices. If the SPX drops, it would likely complete an inverted corrective wave from 1869.00, again pointing to higher prices. This inverted wave would complete anywhere down to 1907. With the index falling just short of the point needed to complete this wave, it seems more likely that the wave from 1835.02 is extending.

Tuesday's Market 10/21/2014

The pullback that I was expecting for today obviously never materialized. Instead the SPX continued to push higher with a vengeance. When I made a post on Sunday that I was looking for 1921 on Monday, I thought I was pushing it. Who would expect a 35 point daily move. The index did not hit 1921 on Monday, but made up for it with a 37 point move today.

I thought the SPX had completed a 5 wave sequence from Friday’s 1877.55 low to 1896.60 on Monday. This would have been Wave 3 from the 1835.02 low. Instead it turned out to be only Wave 1 of 3 from that low. The move from 1896.60 to the end of the day was an inverted corrective Wave 2, and Wave 3 of 3 looked to have completed today at 1934.30. The small pullback was likely Wave 4, with Wave 5 now underway.

Given this count, Wave 5 of 3 has a target between 1960 and 1985, with an optimal target of 1970. As I mentioned earlier, this looks to be only Wave 3 from the 1835.02 low. After a pullback, the SPX would still need to complete a 5^th Wave higher. Since Wave 3 is already quite a bit longer than Wave 1, Wave 5 should be even longer still. A decent sized pullback would be needed to temper the next move higher.

Once the wave from 1835.02 completes, the index will still need to complete the sequence from the 1820.66, so the possibility of a continued strong move to the upside exists. This could all still unwind without the market making new highs, but I prefer the count that has this move carrying to new highs, possibly 2070.  

Monday's Market 10/20/2014

The SPX started slightly to the downside today, dropping to 1882.30 at the open. The index then traded higher in choppy fashion until it reached 1896.60. At that point the SPX pulled back to 1891.55 before moving higher the rest of the day, topping out at 1905.03.

From Friday’s 1877.55 low the SPX completed a 5 wave sequence later that day at 1892.16. The drop this morning completed the first 3 waves of an inverted corrective wave that later completed at 1890.06. A quick move to 1895.97-1892.49-1896.60 then completed a larger degree sequence from the 1877.55 low.

This looks to have completed the third wave of a sequence from 1835.02. The pullback to 1891.55 looks to have been the fourth wave of this sequence, and the rise to 1905.03 then completed the fifth. This completes a sequence from the 1835.02 low. The SPX should decline from this point, with support near 1878.

Looking at the sequence from the 1820.66 low, the index completed the first wave at 1869.00, and has been forming an inverted corrective wave 2 since then. Today completed Wave B of that wave. Again, the SPX should now move lower, possibly to 1878. Whether that occurs as one wave or three will determine whether the index will decline further, or resume the move higher.

1921 On Monday?

Thursday's Market 10/16/2014

The SPX opened lower again this morning. After falling to 1835.02, the index began to rally. It rose in choppy fashion to 1876.01 before falling back into the close.

The SPX, although opening lower, managed to hold above the 1820.66 low. From that point the index looks to have completed a 5 wave sequence higher at 1876.01. The index looks to again be at a critical point. With a 5 wave sequence today 1876.01, there is a danger of the SPX again rolling over and continuing its slide. If this should happen there looks to be support at around 1819. At this point I am still looking at 1820.66 as a longer term low. My current count would have the SPX moving higher, with 1880 as a likely resistance level. If the index moves up to that level 1865 would become support.

Wednesday's Market 10/15/2014

It was a brutal day for the SPX, with the index plunging at the open to 1837.22. After a brief attempt at a rally that brought the SPX back to 1866.64, the index dropped once again, this time reaching a low of 1820.66.

I will be the first to admit that I have not tracked this decline very well, so I will proceed cautiously. The two scenarios I outlined for the longer term outlook yesterday remain intact. Short term, the SPX still looks to have completed a 5 wave sequence from 2019.26 last Friday at 1912.84. The quick choppy action from that point has been the problem for me. After today’s action it looks like the SPX completed an inverted corrective wave as 1935.56-1890.90-1912.02-1874.14-1898.71. So from 2019.26 the index could have completed Wave A at 1912.84 and Wave B at 1898.71. The first drop today may have been Wave C, the bounce to 1866.64 Wave D, and the final drop to 1820.66 as Wave E. This is supported to an extent by virtue of the SPX finally making a higher short term high by moving above the 1866.64 Wave D this afternoon. The move off the 1820.66 low also looks to be an incomplete wave, suggesting further upside is possible.

The short term wave structure suggests a move higher to the 1888 level, with some indications that if this does occur, it should happen early in the trading day. After that a pullback to 1847 seems likely. Obviously if the SPX drops below the 1820.66 low this scenario would be invalidated. Support is possible below 1810, but the next major support would likely be the 1748 level.

Tuesday's Market 10/14/2014

Last Friday the SPX fell to 1912.84 and completed a 5 wave sequence from the 2019.26 high. I thought there was a good chance that the index would rally from that point, but that turned out to be only the first wave of a higher degree sequence from that high. The SPX appears to have completed that sequence today at 1871.79. The first step in confirming this as a low would be a move above the previous short term high of 1898.71 hit earlier in the day.

I have been looking for this decline to complete in one of three ways. One of those scenarios was made highly unlikely with the drop below 1881, so I will briefly outline the other two. Looking at the weekly chart I have identified 5 waves as having completed from the 666.79 low. The initial move to 1219.80 is counted as Wave 1 in both scenarios. My current count has the next waves as 2 and 3 at 1010.91 and 1370.58. The following decline is labeled as Wave A of an ongoing corrective Wave 4. Wave B then completed at 2019.26, putting the SPX currently in Wave C of 4. Given the current wave structure, Wave 5, when it unfolds, is likely to be quite short. Consequently the decline preceding Wave 5 also needs to be shallow. To accomplish this, the current Wave c of 4 needs to be shorter than Wave A, which was around 295 points, and Wave E of 4 will need to be shorter still. This obviously still leaves some room to the downside, but with the SPX completing a sequence, and the need for a shallow Wave E, it is possible that this is the end of Wave C. Wave D should then carry the SPX to new highs, and be followed by a Wave E decline to complete Wave 4. One more move to new highs would then complete the sequence from 666.79. An EW equivalent count would be I-II-1-2-3-4-III-IV-V, with the SPX currently in Wave 4. This is the same wave structure as the wave from 1074.77 to 2019.26.

The second scenario is much more bearish in the near term, but may turn out to be more bullish in the longer term. Again Wave 1 can be seen as the move from 666.79 to 1219.80. The entire move from that point can be counted as an ongoing inverted corrective Wave 2 with Wave A completing at 1010.91, Wave B at 1370.58, Wave C at 1074.77, and Wave D at 2019.26. The SPX would then be currently in Wave E of 2. The minimum target for this wave would be 1748, but would likely carry lower than that. This would then need to be followed by Waves 3, 4, and 5. I had discounted this scenario for some time, as until recently the need for this wave to exceed the 295 point decline of Wave C would have taken the index below the 1370.58 high, which seemed unlikely. The SPX however has now reached a level where that magnitude of decline is plausible.

Monday's Market 10/13/2014

Thursday's Market 10/09/2014

It has been an interesting couple of weeks since the SPX hit an all time high of 2019.26 on September 19^th. The decline from that high began innocuously enough, with the index dropping to 1978.63. I am counting this as the first wave of a 5 wave sequence. The second wave unfolded as an inverted corrective wave, 1993.63-1966.22-1986.37-1964.04-1985.17. From 1985.17 the SPX declined sharply to 1926.03 and was followed just as quickly with a bounce back to 1977.84. Another sharp decline followed, this time to 1925.25. This again was followed by another swift bounce to 1970.36 yesterday.

I am counting the decline to 1926.03 as the third wave down from 2019.26, and the bounce to 1977.84 as the fourth wave. This count gives a target of between 1921 and 1907, with an optimal value of 1915 for the fifth wave.

While this could still go in several directions, I am looking for a move lower to 1918+/- to complete wave 3 of E. This should be followed by a bounce, maybe to 1930, and then a final move lower to 1915+/- to complete a 5 wave sequence from 2019.26. There is a chance the advance from there could be surprisingly strong.

Thursday's Market 10/02/2014

It did not take the SPX long to choose between the two paths I described on Tuesday. Wednesday the index opened decidedly to the downside, confirming the inverted corrective wave that terminated at 1985.17. The SPX continued lower from the open, falling to 1926.03 this morning with only two noticeable bounces along the way.

Once the SPX had fallen to 1926.03 by late morning, the first real attempt at a rally from the 1985.17 occurred. The index climbed steadily through the remainder of the day reaching 1952.32 before falling back slightly into the close.

I count nine waves from the 1985.17 high to the 1926.03 low. The first wave ended at 1968.96. The next five waves completed an inverted corrective second wave, 1977.73-1954.30-1964.33-1945.44-1951.10. The next three waves, 1934.82-1938.15-1926.03 then completed a 5 wave sequence.

Recalling the count from 2019.26, the SPX completed the first wave at 1978.63. The index then completed an inverted corrective wave at 1985.17. Notice that the end of this wave, 1985.17, completed above the termination point of the first wave, 1978.63. Sometimes this indicates the completion of only the first wave in an ongoing corrective wave. This may be a possibility in this case, with 1985.17 being a wave a, and today’s 1926.03 low being wave b. The short term count from 1926.03 indicates three waves, which would then complete the entire second wave from 2019.26 at 1952.32. I am now looking for three waves down to complete a 5 wave sequence from 2019.26.

My target for this initial decline from 2019.26 is 1917. This should complete with a move below 1932, a small bounce, and then a final decline to 1917.

If 2019.26 was the end of a sequence from 1074.77, several preliminary targets can be estimated. There a couple of interesting possible scenarios that I will elaborate on as this wave unfolds.  One of these scenarios suggests the SPX will complete this wave above 1881. Should that level be broken to the downside, I would look for a move below 1748.