Tuesday's Market 08/11/2015

In several posts following the 2056.32 low on June 30^th, I mentioned a rally to 2106, followed by a test of the 1980.90 low of February 2^nd could be next. While some of the price action since that time would seem to discount that scenario, the recent price action tends to substantiate it. After the SPX rallied more than expected to 2132.82, the SPX quickly dropped to 2063.52. Another rally took the index to 2112.66, before falling again to 2067.91. Then on Monday the SPX staged one more rally to 2105.35, very close to the 2106 level mentioned earlier.

Looking back to the September 19^th 2019.26 high, I have been counting the subsequent action as a series of nested semi-inverted corrective waves that would eventually take the SPX down below 1725. Since I was looking for 2106 as a termination point, the rally above that level was troublesome, but analyzing the waves from 2056.32, the entire move from that point can be counted as a five wave sequence to Monday’s high of 2105.35. Although many of the waves were quite complex, the sequence 2056.32-2128.91-2063.52-2112.66-2067.91-2105.35, does complete a 5 wave sequence. The points (2506.32, 2128.91), (2063.52, 2112.56), (2067.91, 2105.35) give an R^2 value of .99414.

It should be an interesting couple of days. If my analysis is correct, this should be the first of several waves down, ultimately carrying the SPX below 1725. This first move down should complete between 2014 and 1979.