The SPX gapped lower this morning,
dropping to 1931.41 within a few minutes. After bouncing around for a couple of
hours, the index headed lower again to 1918.21. After another short
consolidation period the SPX dropped to the low of the day at 1903.07, before
staging a strong rally to 1920.41 in the last 15 minutes.
The entire drop today looks to have
completed the sequence from yesterday’s 1986.26 high. As discussed yesterday,
this sequence appears to be wave d of an ongoing inverted wave. Yesterday I
said I would then expect a bounce of something less than 14 points. This was
based on the point move for the first waves of the sequence. With the low in,
this bounce could carry to 1946 and still satisfy my correlation criteria.
During this inverted sequence, Wave c reached an oversold level on the 15
Minute RSI(5). It would likely that Wave d would also reach this oversold
level.
Looking at the longer term count, I
have labeled the 1993.48 high Wave (b) yellow. The drop to 1965.98 could have
completed Wave (c), and the current inverted wave then would be Wave (d). After
that the market should undergo one more decline for Wave (e).
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