Following Tuesday’s market action, I mentioned
the possibility of the SPX forming a semi-inverted wave from the 1879.88 low.
From that low the index rose to 1948.04, and then dropped below the first low
to 1867.08. This wave would suggest a move higher between 1879.88 and 1948.04,
followed by a pullback within that same range, and finally a move above 1948.04.
The SPX did open higher, to
1914.56, within the range described above. The pullback that followed again
stayed within that range, barely, as the index fell back to 1880.13. This would
complete Waves A-B-C-D of the semi-inverted wave, with a Wave E target between
1945 and 1952. This should be followed by a pullback, before another move
higher to 1980 or above. This pullback could carry as low as 1905, and still
target the 1980 area.
My longer term view remains that
this correction should terminate below 1725. Given the count to this point,
there are a couple of important levels to watch. At this point a move above 1993 would
dramatically increase the possibility that the low is in. If the SPX fails to
reach 1966, the low could be below 1725. Lastly, if the index fails to clear
the 1948.04 high, it could be setting up for another major move lower.
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