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 5th 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.
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