Friday's Market 10/02/2015

At the open it appeared that my first scenario from yesterday was playing out as the SPX tumbled to 1894.17. Once hitting that low the index traded in choppy fashion for an hour as it formed the beginnings of another semi-inverted wave. The SPX then rallied strongly throughout the day, reaching a high of 1951.21.

After the 1927.21 high yesterday, the SPX dropped 26 points before rallying to 1924.52. From there to this morning’s 1894.17 opening low was slightly more than 30 points, but similar to the previous drop. As the index rallied today it became clear that my third scenario from yesterday was more likely. Namely that the SPX would form an inverted wave carrying it above the 1921-1935 level, and then back within that range. Today’s low then looks to be the third wave, with the fourth possibly completing today at 1951.21. Given the 26 point drop of the first wave, and the 30 point drop of the third wave, the fifth wave should be slightly shorter than the first, or slightly less than 26 points. Such a drop would bring the SPX back within the 1921-1935 level. This would complete the inverted wave, and thus the fourth wave from 1935.32. A very small rally would then complete the fifth wave and Wave (D).