Wednesday 04/15/2020

As of Friday's close, I made my case for the possibility of the SPX having completed a 5 wave sequence from the 2191.86 low. Given my count from that low, there is an upper limit of 2888 for this wave to complete.

On Monday, instead of continuing down from Friday's 2818.57 high, the index gapped up at the open, and then continued to move higher through the day, finally topping out at 2851.85. Friday's high of 2818.75 still looks to have completed a 5 wave sequence from the 2447.49 Wave 4 low. But it does look like that only completed a first wave from that low. Looking at the SPX from the 2818.57 high, the index first dropped to 2721.17 on Friday. The initial move higher on Monday took the index to 2843.83 with a subsequent move lower to 2807.89. Finally the SPX made another push higher to 2851.85. From the Wave 4 2447.49 low, the SPX thus has formed 5 waves, (2447.49, 2818.57), (2721.17, 2843.83), (2807.89, 2851.85), which has an R^2 value of 1. At times waves will form such a structure, or a structure that creates a trap.

So taking the waves from the 2191.86 low to the 2851.85 high, gives, (2191.86, 2300.73), (2360.25, 2641.39), (2447.49, 2851.85). This is still under the 2888 upper limit, and has an R^2 value of .9979.

This morning saw the SPX gap down, moving into oversold territory on the RSI(5), and then staged something of a recovery to hit overbought, without making a new high on the SPX. This suggests another move down. The level I am watching to the upside remains 2888.

Market Meanderings 04/12/2020

On Wednesday, it looked like the SPX had completed a 5 wave sequence from the 2657.67 low, and was poised to  to move lower. Instead, on Thursday, the SPX opened higher, moved up to 2818.57, and then began to fall back into the close.

If we look at the move from 2657.67, we can see an initial move up to 2729.55. From there the SPX pulled back to 2708.35, before rising again to 2754.09. After another pullback, the index rose again to 2813.07, before another pullback to 2778.76. Looking more closely at the three pullbacks following the 2729.55 high, we have (2729.55, 2708.35), (2754.09, 2729.52), (2813.07, 2778.76), which has an R^2 value of .9999. Given that, the best interpretation is that the SPX formed another inverted corrective wave for wave 4.

Widening out, and then looking at the wave structure from 2447.49 we have (2447.49, 2538.18), (2657.67, 2729.55), (2778.76, 2818.57), which has an R^2 value of .9971, which would satisfy conditions for the completion of that wave. And since that is still within the range that would satisfy a completion of a 5 wave sequence from 2191.86 low, it still appears that the SPX has completed that sequence.

The negative technical picture I elaborated on Wednesday essentially remains the same. On the 15 Minute chart, a negative divergence arose, and near Wednesday's close, the SPX moved to oversold on that chart, and then moved above 50, without moving to a new high. This could possibly be the start of a move down.

The negative divergence on the 60 Minute chart remains, and the Daily chart shows the SPX having moved into overbought territory on the RSI(5). On Wednesday the SPX had remained below 50 on the Weekly chart, but the slight move higher on Thursday brought that above 50 on the RSI(5), one more indication of at least a short term top.

If the SPX continues to move higher, the best interpretation would be to take the entire move from 2657.67 to 2818.57 as wave 3 from the 2447.49 low. The pullback to 2762.36 could then possibly be wave 4. I bring this possibility up, because the minimum projection for wave 5 under this scenario would be 2908, above the 2888 upper limit for a wave 5 from the 2191.86 low. That could indicate that this move has a ways to go on the upside.

Wednesday 04/08/2020

With the likely end of a corrective wave on Tuesday at 2657.67, the expectation was for a move higher today. The SPX did move higher this morning to 2696.23 before falling back to 2663.30. The index then began a methodical move higher for much of the rest of the day. The first peak came at 2729.55 as the RSI(5) reached overbought. A pullback to 2708.35 brought the RSI(5) back below 50, and as it rose above that level it gave the first indication that 2729.55 may have been wave 3, and 2708.35 wave 4 of the sequence from 2447.49. The SPX then moved slightly above yesterday's high, to 2760.75. The RSI(5) hit oversold shortly before that, and then formed a negative divergence.

Looking at the wave structure from 2447.49, and the previously identified waves, the points are (2447.49, 2538.18), (2657.67, 2729.55), and (2708.38, 2760.75), which has an R^2 value of .997. So the criteria for a completed wave was met at SPX 2760.75.

I had previously given a range of 2755 - 2888 as the target for the 5 wave sequence from the 2191.86 low. That was also met at SPX 2760.75. This wave structure had the points (2191.86, 2300.73), (2360.25, 2641.39), and (2447.49, 2760.75), with an R^2 value of .992. Once again, the criteria for a completed wave from that low has been satisfied.

Interesting that the Wave 5 top was very similar in nature to the wave 3 top at 2641.39. With that wave there was a wave d peak at 2637.01, followed by a pullback, and then a lackluster 3 wave move to marginal new highs. Wave 5 had a wave d peak at 2746.03, followed by a pullback, and then a lackluster 3 wave move to marginal new highs.

I outlined the technical indications for the 15 Minute chart, and with today's high possibly being a significant top, I thought I would provide some of the technical indications that would tend to support this analysis.

The 60 Minute chart shows that the SPX formed a negative divergence on the RSI(5) with today's marginal new high, which many times indicates a move lower to at least oversold levels.

Finally, a look at the Daily chart shows that the RSI(5) also reached overbought today.

Putting all of this together, my 5WaveModel suggests the SPX completed a wave today from 2447.49. This completed within the range identified as the end point of a 5 wave sequence from the 2191.86 low, suggesting an end to that move. A negative divergence has formed on both the 15 Minute chart, and the 60 Minute chart. The Daily chart shows the SPX in overbought territory. The 15 Minute, 60 Minute, and Daily charts all show the SPX either in, or coming off of, overbought territory. And there is the prospect of a long weekend after tomorrow. Recently there has seemed to be a reluctance to hold longs over the weekend. While none of this guarantees a top is in place, there are ample indications to be at least cautious, at least in my mind.

From here I am looking for supportive market action to confirm my analysis. When and if that materializes, I will give some thoughts on the next move.

Tuesday 04/07/2020

It was another gap up opening for the SPX. After opening at 2738.65, the index rose to 2756.89 before falling back. That proved to be the high of the day, and after the higher open, the SPX spent the rest of the day giving back all of it's gains. It didn't take long for the SPX to drop back to 2688.03 before trying to regroup and move higher. It did rally to 2746.03, but after that it was all downhill. An hour before the close the index was at 2669.55, erasing all of it's gains. The last hour was spent trying to break back into positive territory, but every rally was met with more selling. The SPX hit the low of the day at 2657.67, and closed only slightly above that level.

Going into this morning I was looking for a wave 5 from the 2447.49 low to complete either at Monday's high, or possible up to 2692. This morning's opening move to 2756.89 was obviously higher than I was looking for. So a review of the chart was in order:

Looking at the entire wave structure, the SPX made it's first move to 2475.51 off that low. From there, one can count 4 pullbacks before yesterday. 2475.51-2464.39, 2488.78 - 2466.10, 2614.54 - 2594.55, and 2636.28 - 2620.52. Taking the first 3 as points, (2475.51, 2464.39), (2488.78, 2466.10), (2614.54, 2594.55), gives an R^2 value of .9943, which satisfies my model for a 5 wave sequence. Taking the last 3 sets, (2488.78, 2466.10), (2614.54, 2594.55), and (2636.28, 2620.52) gives an R^2 value of .9995, which also would satisfy my model. I usually label sequences as they complete, and so the first 3 pullbacks were labeled as a-b-c-d-e(2). So the entire wave structure was 1-a-b-c-d-e(2)-3-4. This resulted in the wave projection I gave last night. Equally possible would be 1-2-3-a-b-c-d-e(4), as the last 3 pullbacks qualify as a completed sequence. Using that count, 2756.89 would satisfy the conditions for a 5 wave sequence. As (2459.96, 2475.51), (2464.39, 2488.78), (2620.52, 2756.89) yields an R^2 value of .9997.

With the wave from 2459.96 completed at 2756.89, the next move would be a pullback. As we saw today, the SPX did pull back, in what appears as 3 waves from that high; 2688.03 - 2746.03 - 2657.67. This also brought the SPX into oversold territory on the 15 minute chart.

Taking the pullback from wave 1 which was 2538.18 to 2459.96, and the 3 waves of today's pullback gives (2538.18, 2459.96), 2759.89, 2688.03), (2746.03, 2657.67) gives an R^2 value of .9938. So it looks like the SPX has completed waves 1-a-b-c-d-e(2). The next move appears to be up.

The SPX now seems to be in the last stages of Wave 5 from the 2191.86 low. While I am still looking for higher levels, those higher levels may be minimal. My target for this wave remains 2755 - 2888, a level that the SPX already reached this morning when it hit 2756.89. Unless the SPX manages to move above 2888, I view this as the index reaching the end of this move higher. There are always alternatives of course, but I'll wait until this wave completes before getting into any of those.

Monday 04/06/2020

On Friday I described the decline from 2538.18 to 2459.96 as a complete 5 wave sequence. From that point, in the last hour and a half of Friday's session, the SPX did some technically productive work, putting a series of higher highs, and lower lows on the 5 minute chart.

This morning the SPX continued that positive tone in a big way. A gap up at the open, to 2578.28, started the day off, and the index continued higher right until the close, with only minor pullbacks along the way. From the 2459.96 low, the SPX looked to have formed a wave 1, followed by waves a, b, and c of 2, an inverted corrected wave. The opening surge to the SPX to 2614.54, making wave d of wave 2, and the pullback to 2494.55 completed wave d, and the entirety of wave 2. It then looks like the move higher to 2636.28 formed wave 3, the pullback to 2620.52 wave 4, and the push up to 2676.85 near the close could be wave 5. The 5 waves outlined above satisfy my model for the completion of a 5 wave sequence, and the SPX is in overbought territory on the short term charts. Using my thresholds, this wave could complete anywhere from today's high of 2676.85, on up to a maximum level of 2692. So it is conceivable we see a continuation at the outset tomorrow.

On Friday I mentioned a slight adjustment to my count from the 2191.86 low. The adjustment affects Wave 3, which started at 2360.25. I originally had called 2637.01 as the end of that wave, but after some review, I would label that as wave d of 2 of an inverted corrected wave, the pullback to 2520.02 as the completion of wave 2, and then the three waves up to 2641.39 as waves 3,4, and 5, completing the wave from 2360.25. The move from 2641.39 down to 2447.49 still counts as a 5 wave sequence from 2641.39 to 2447.49, so the only thing this does is slightly alter the range for the completion of wave 5. I had been mentioning 2749 to 2886 for that range, but will change that to 2755 to 2888.

So to review, I see the SPX as having completed 4 waves from the 2191.86 low. The target range for wave 5 is between 2755 and 2888. Wave 4 of this sequence completed at 2447.49. Wave 1 of 5 completed at 2538.18. The second "wave" completed at 2459.96. This could be wave 2, or wave a of in inverted corrective wave.  The third wave of the sequence is in progress, and will complete either with today's high, or possibly up to 2692. At that point the index should pull back before continuing higher.

Friday 04/03/2020

The SPX opened slightly lower this morning, before moving higher, to slightly above yesterday's high to 2538.18. From there it was all downhill, as it has mostly been on Fridays. Seems like no one wants to carry their longs into the weekends. So except for a few very minor rallies, the index went pretty much straight down from 2538.18 to the low of the day at 2459.96. The SPX did then move slightly higher into the close, making it back to 2497.10 shortly before the close.

Picking up on the count from where I left off yesterday, the SPX had completed Wave 2 from the 2447.49 low, and was moving higher in what appeared to be wave 3. With the move to slightly higher levels this morning, the index looks like it actually completed waves 3 and 4 yesterday, and wave 5 of the sequence this morning. The entire sequence would the be 2447.49 - 2488.09 - 2467.68 - 2509.07- 2492.10 - 2538.18.

Looking at the move from this morning's high of 2538.18 to the low of 2459.96, it looks the SPX completed a 5 wave sequence to the downside. Wave 1 ended at 2495.78. Wave 2 was the meandering inverted corrective wave that terminated at 2487.72. Waves 3, 4, and 5 then followed at 2464.42 - 2473.97 - 2459.96.

So my ongoing count is still intact. From the 2191.86 low, the SPX completed the first wave at 2300.73. The index then formed an inverted corrective wave 2 the ended at 2360.25. My count then has wave 3 ending at 2637.01. In looking at it again today, there is a count that has wave 3 completing at 2641.39. Either way, there is a 5 wave count down, that ends at 2447.49, for the fourth wave. I'll cover that in more detail this weekend. So this count suggests the SPX will rise in a wave 5, with a target of 2749 - 2889.

Thursday 04/02/2020

The SPX opened slightly lower this morning, but quickly reversed to move above yesterday's close, before once again moving lower to 2455.79. At that point the index found some direction, rising steadily to 2532.21. From there the SPX moved sideways for the next couple of hours before falling to 2467.68. After that the index once again moved steadily higher into the close, moving back up to 2530.13, before dipping into the close.

Although the SPX did move lower at the onset, it did hold yesterday's 2447.49 low. Today's action can best be viewed as a wave 1 from that low to 2488.09. Most of the rest of the day was then spent working on the inverted corrective wave 2, which looks to have ended at 2467.68. That would now put the SPX in a wave 3 from that low. Since the index did end the day in overbought territory on the 15 minute chart, the 3 waves off the low could possibly be part of a corrective wave, so the 2447.49 low remains important.

I am still viewing this as the start of wave 5 from the 2191.86 low. A move below 2360.25 would invalidate that count. Until then my short term target remains 2749 to 2889.

Wednesday 04/01/2020

Sorry I missed posting last night. I try not to interject personal things or opinions into the blog, because my objective is to analyze the market as best I can. While the rest of Illinois is under a "stay at home" order, I happen to work for an "essential business", and so, luckily, or unluckily, still working. Not in the medical profession, so not one of the "heroes", but it has been busier than usual. So doing my best to keep myself safe, and more importantly, more "at risk"loved ones safe. Hope everyone is doing the same. All about priorities.

But enough of that. Numbers keep me sane, so let's get to that.

Picking up where I left off, I mentioned on Monday that the 2631.80 high on the SPX might have completed a 5 wave sequence from the 2520.02 low. On Tuesday the SPX did open slightly lower, but soon moved higher, topping out at 2641.39. This was slightly above Friday's 2637.01 high, and looked like it might be a breakout to the upside. However, the index quickly reversed course, dropping to 2588.90, recovering a bit, then dropping again to 2571.15 before staging a small recovery into the close.

This morning the SPX gapped down at the open, dropping to 2486.22. After a short-lived rally attempt, the index fell to 2466.99, rose to 2494.67, and then fell to the low of the day at 2447.49 near the close.

My count from the 2191.86 low remains intact. I had mentioned that the SPX may have to correct from the 5 wave sequence starting at 2360.25, and ending at 2637.01. The support levels I gave for this scenario were 2482 first, and then 2402. As I have mentioned, some of these support levels are a work in progress. The levels I mentioned were derived using 2360.25 as the initial point. I noticed tonight that by using 2191.86 as the initial point, it would give 2443 as the ideal level, fairly close to today's 2447.49 low. Something for me to take note of.

So continuing my count from the 2191.49 low, the SPX completed Wave 1 at 2300.73. After an inverted corrected wave from there to 2360.25, the index then completed a 5 wave sequence at 2637.01 for Wave 3. The entire move from that high to today's low of 2447.49 would be Wave 4. If correct, that would mean that the SPX is about to embark on Wave 5. Given the wave structure thus far, Wave 5 would project to between 2749 and 2889.

With the markets as they are, and everything going on, I feel it is as important, if not more so, to know when you are wrong, as when you are right. So in that vein, a drop below 2360.25 would invalidate the count. Otherwise I am looking for the SPX to move up to the 2749 - 2889 level.

Monday 03/30/2020

At the open, The SPX rebounded slightly from Friday's late afternoon sell-off. Seems as though a lot of people are wary of holding longs over the weekend. After closing at 2540.21 on Friday, the SPX jumped to 2580.76 near the open, then settled down, trading sideways before continuing the move higher to 2611.93 before pulling back slightly to 2588.88. The index continued higher after that hitting 2680.31 before setting into the close at 2626.04.

For most of the last two days the SPX has traded within a range bounded by last Thursday's 2637.01 high, and Friday's early morning low of 2520.02. Today's move failed to breakout to a new short term high, so a move to slightly lower levels is still possible. My count from the weekend remains unchanged. From the 2191.86 low, the SPX completed Wave1at 2300.73. From there index formed an inverted corrective Wave 2, which ended at 2360.25. The SPX then rose in a 5 wave sequence to 2637.01 to complete Wave 3. Wave 4 may have ended with the small pullback to 2520.02, but without the index moving above 2637.01 that remains unconfirmed.

Until the end of Wave 4 is known, precise projections for Wave 5 cannot be made, but in an effort to give some interim targets, I will run through a couple of scenarios. If Friday's low of 2520.02 completed Wave 4, my current count would suggest a Wave 5 high of 2956 - 3089. But if that low holds, it also presents an alternate count suggesting 2690-2771 as the high. So a couple of levels to work with.

Shorter term, today's 2631.80 high may have completed a 5 wave sequence from 2520.02. I've hus added some short term support levels at 2584, and 2548.

If the SPX moves below 2520.02, support is at 2482, and 2402.

Market Meanderings 03/29/2020

It looks like I was premature in calling 2571.42 the completion of a 5 wave sequence from the 2191.86 low. Looking at the entire move from 2191.86 to 2637.01, one could make a case for the completion of a sequence. The three waves 2191.86 - 2300.73, 2407.53 - 2571.42, 2465.20 - 2637.01 would satisfy my model, however there are some issues with that count. First, the corrective wave still looks to be as originally labeled, from 2300.73 - 2630.25. In order for the the three waves mentioned to complete a sequence, the first three pullbacks, 2300.73 - 2198.98, 2436.88 - 2360.25, and 2501.57 - 2407.53, would also need to complete a sequence to from the corrective wave, and they fall just short of my model's threshold for that.

Keeping the original count intact, the subsequent move from 2360.25 to the high of 2637.01 does complete a 5 wave sequence, and so it would appear that only three of five waves have completed thus far. Support looks to be 2482.

Looking at the 60 Minute chart, I did update it to reflect the alternate count I had mentioned. The first move down from 3393.52 contained Waves 1, and 3, separated by a corrective sequence. So both Waves 2, and 4 completed corrective sequences.

The Weekly chart reflects my view that 3393.52 completed a 5 wave sequence from the 666.79 low. With a 5 wave sequence down from that high, the market looks to be at an inflection point. Was 2191.86 the low? Or simply a resting point? Things could be interesting from here, as the market always is.

I was asked in a comment recently how and why I turn waves into points for my analysis. Since I sometimes have trouble fitting my answer into the comments section, I'll try to answer it here. First, I do see markets moving in waves. When I started, discerning waves was somewhat subjective. I have attempted EW and other methods, so I tried to incorporate some of that. Through the years I have tried to become more objective in my methods, and I do use several technical indicators to help guide me. Most of my main waves seem to be consistent with more traditional methods, and I have used other counts I respected to ensure my model was not dependent on arbitrarily picking points. At times there is a bit of tracking smaller structures for my counts, and I won't go into a great amount of detail on that at the moment, but sometimes one must look at several time frames to see the entire picture.

So that is a little background on what I strive to do. As for turning waves into points, I don't know at what point I started doing that. I have for a long time looked for an objective way to find the ends of waves. At some point I noticed that visually there seemed to be some correlation between certain waves. Waves seemed to either all get longer, or shorter, but there seemed to be no real relationship between them, when taken as absolute moves in points. Then I realized through some work that the increase, or decrease, in the waves was dependent on the difference in the starting points of the waves. So although I use a linear relationship as the basis for my model, that does not make the moves in the market linear. Looking at waves as points is just the easiest way I have found to be able to use that relationship to extrapolate end points.

That is the easiest way I can describe it. And using the linear relationship is the easiest way I have found to track that relationship. I hope that answered the question. I'd be happy to go into more detail to anyone who is interested. Feel free to comment or email. I will try to address any questions as best I can.

Wednesday 03/25/2020

The SPX opened higher today, moving above yesterday's high to 2501.57. After a slight pullback, the index powered higher, hitting the high of the day at 2571.42. From there the SPX moved slightly lower into the close.

From the 2191.86 low, the SPX looks to have completed a 5 wave sequence at 2571.42. This traced out as 2191.86 - 2300.73 - 2360.25 - 2501.57 - 2407.53 - 2571.42. Wave 2 of this sequence was the inverted corrective wave. With a 5 wave sequence likely completing, a pullback would be in order. So it looks like decision time will be setting up shortly. New lows, a continued rally? Looks like we will find out shortly.

We might see a pullback at this point. Support may come in between 2368 and 2401,

Tuesday 03/24/2020

Going into today's trading, I had viewed yesterday's 2191.86 low as wave d of a 5 wave sequence, looking for wave e to then terminate between 2389 and 2409. The SPX opened significantly higher, reaching 2387.98 within the first hour, which was just below that range. The index continued higher, moving into that range, but then moving above it to 2436.88. After a small pullback, the SPX moved higher into the close, topping out at 2449.71.

As I indicated yesterday, a move above 2409 wold invalidate the short term count I was following, and point to something else going on. So I have had to re-evaluate the wave count. Several days ago I had mentioned an alternate count in which the SPX was in the final wave of a sequence from 3393.52. That count is still in play, however there is not a clear 5 wave sequence from Wave E (2553.93) to the 2191.86 low.

The other possibility at the moment is to look at the move from Wave C (2710.89) to the 2191.86 low as a 5 wave sequence, making 2191.86 Wave D, and not 2367.04. There is a possible 5 wave count for that move. Wave E is then possibly on the way, with the SPX moving into a range that would complete that sequence today. Technically this also fits, with Waves A and C of the sequence touching overbought. Looking at 2553.93, or what I originally have labeled as Wave E, you will notice the RSI does not hit overbought. Today's move did bring the index up to that level. The upper bound for this count is 2503. This would be the highest point the SPX could reach and still satisfy my model.

So it looks like a move above 2503 makes 2191.86 the completion of a 5 wave sequence form 3393.52, and at least a short term bottom. Until that level is exceeded, another move lower is still possible.

Monday 03/23/2020

The SPX opened lower this morning, dropping to 2229.47 in the first 15 minutes before rallying to 2294.55. The rally was short lived, and the index soon rolled over, falling to the low of the day at 2191.86. From there the SPX ran up to 2300.73, fell back to 2198.98, and then moved slightly higher into the close.

The SPX has moved lower since last Thursday's wave c high of 2466.67. My last few posts have outlined my expectations from that point. First a move lower below 2280.52, followed by a move higher to complete the fifth wave from 2280.52. With today's move to 2191.86, the SPX looks to have completed a 5 wave sequence from 2466.67, the wave c high. I have labeled this on the 15 minute chart as 2466.97 - 2404.99 - 2453.01 - 2353.85 - 2404.30 - 2191.86. Now knowing the probably fourth point, a target range for wave e can be projected. To this point the move has been 2280.52 - 2431.03 - 2385.83 - 2466.97 - 2191.86. This would project a target of 2389 - 2409 for wave e.

So I am looking for a move higher to 2389-2409. A move above 2409 would likely invalidate this short term count. A move below 2191.86 before reaching my target level would mean wave d has not completed.

Market Meanderings 03/22/2020

On Thursday I noted a setup that I thought indicated the market would move lower. Overnight Thursday the futures were significantly higher, and that was looking unlikely. But at the market open, the SPX only moved slightly higher, to 2443.50. The index then sold of to 2378.08, before moving to the high of he day at 2453.01. From there the index moved steadily lower, with only a couple of failed rally attempts, finally closing near the low of the day of 2295.56.

I will discuss in more detail what I saw on Thursday, but thought a short discussion of my methods might be useful before I do that. My model is based on one relationship, and seems embarrassingly simple. Each wave breaks down into 5 smaller waves, and those smaller waves, when taken as points, exceed a certain correlation threshold, which is an R^2 value above .99. In the history of my posts, I have noted many, many waves, and each wave adheres to this rule. So the model is not complicated. The complication comes in correctly discerning the waves. So since stumbling across that relationship, I have tried glean what I could from others about correctly identifying waves.

Some waves are fairly straight forward, and are easy enough to follow. But waves can be infinitely complicated, as each can further break down into additional 5 wave sequences. The complicated the wave, the more difficult it can be to follow. it. As an example, I will look at the long term SPX chart.

Looking at the chart, Wave I began at 666.79, and ended at 1219.80. Taken as a point, it would be (666.79, 1219.80). Wave II would be (1810.10, 2872.87), and Wave III (2346.58, 3393.52). The R^2 value of the three points is .9925. So that would meet the requirements for completing a 5 wave sequence. And I guess the obvious question is how many false signals given? The answer is very few. Once the first and third waves are identified, a range for completing wave 5 can be given. If it turns out to not be wave 5, the wave will terminate either above or below that range. That is my model in a nutshell.

When I give targets, or what I have been calling primary targets, they are based on the range where wave 5 would complete to satisfy my model. At times I will mention secondary targets. While the above rule is absolute, and is true for every wave, I have always tried to find additional relationships. The holy grail of my model would be able to project each wave based on prior waves. So I have notice some other relationships that may usually work, but are not universal. So I try to distinguish between the two by using "primary" and "secondary" target labels. An example of this would be my 2030 secondary target for the completion of the wave down from 3393.52.

What I noticed was that the corrective wave generally completes based on previous points. If you take (Start of wave, End of correction), (End of correction, Wave III), and (Wave III, Wave V), again the correlation comes in above .99. So for this example, (666.79, Corrective Wave), (Corrective Wave, 2872.87), (2872.87, 3393.52). Now you can compute where the correlation is 1.00, and a likely target. For this example, the target is 2030. Sometimes the range can be large, but this method usually comes close. Should that target be broken, the next target would be computed by using the next lower high of the previous wave, or 2116.48.

All of what I do here is based on correlation of points. Some are experimental in a sense, so I want to make a clear distinction between those and hard Wave 5 targets. But I decided to discuss some of this to show that there is some method to the seeming madness, and not just numbers I pick out of thin air.

Which brings us back to Thursday. Given the previous wave set up, I think I mentioned Wednesday's 2280.52 low as a possible Wave 3. The implication being there wold be a move higher, followed by one more move lower to complete a 5 wave sequence from 3393.52. On Thursday we did get a move higher, with he SPX reaching 2466.97.

I consider waves to be fluid, reflecting the sum knowledge of investors, or speculators. So my labels are based on the most probable outcome given the wave structure. My view is that a change in structure reflects a change in sum knowledge. As long as the points themselves are not changed, adjustments to the count can occur up until a 5 wave sequence completes. So when I looked Thursday's action, I saw this:

Although the SPX moved higher through the day, it never seemed to have a lot of conviction. If the 2280.52 low was Wave 3, Wave 4 higher should have completed in a 5 wave sequence to the upside. When I looked at it more closely, I saw the first three moves higher as 2280.52 - 2359.75 - 2305.91 - 2409.81 - 2319.78 - 2431.03. (2280.52, 2359.75), (2305.91, 2409.81), (2319.78, 2431.03) has an R^2 value of .9962, and indicates a 5 wave sequence ended at 2431.03. The move from 2431.03 to 2385.83, when looked at on a smaller time scale, also breaks down into a 5 wave sequence. Then the move from 2385.83 to 2466.97 breaks down as (2385.83, 2432.27), (2408.31, 2456.50), (2421.08, 2466.97), which has an R^2 value of .9956, completing another 5 wave sequence. So the entire mve from 2280.52 to 2466.97 broke down into 3 waves, and not the expected 5. This implies that this move was part of a corrective wave that would mean a move lower below 2280.52. Then the corrective wave would complete with a move higher. Since we know the first and third waves, once we see the low (Wave d), we will be able to calculate the Wave e end point. That  would only be the second wave 2553.93, meaning 3 more waves down to complete that sequence. And since that would be the third wave down from 3393.52, it implies still another wave down after that.

So with the wave structure as it is indicates some work to the downside still needs to be done before any rally would occur. But I'll take a closer look at that once we see how the current sequence plays out.

And most importantly, everyone stay safe and well.

Thursday's Market 03/19/2020

A little pressed for time tonight, so I'll try to hit the highlights. The trading was a little choppier today than we have seen lately. For the most part the SPX continued the small rally from yesterday's 2380.52 low. But in interesting fashion. I count a 5 wave sequence from that low to 2431.03. Appears to be a complex corrective wave from 2431.03 to 2385.83, then another 5 wave sequence from there to the day's high of 2466.97. In other words three waves from yesterday's low to today's high. I would expect the wave to unfold in 5 waves, which opens up some interesting possibilities. Either this move higher ha not completed, or yesterday's low was but a first wave instead of all of Wave 3 from the 3393.52 high. Or potentially more downside to come.

For now we'll keep an eye on the levels mentioned yesterday:

A move above 2553.93 would likely mean at least a short term bottom is in.

Adjusting for today's move higher, support for a final wave of this move becomes 2290-2135. So a move below 2135 would mean there is more work to be done to the downside. If the SPX moves into the 2290-2135 range, 2466.97 becomes the level to look for a move higher.

To expand on the three waves up from today. If that holds true, the diagonal on the chart would likely be broken to the downside. Thinking in terms of the down waves I spoke of the other day, it means today's high would be the completion of 4 of 9 waves.

Market Update 03/18/2020

The SPX opened lower again this morning, dropping to 2385.34 before attempting to rally. That attempt took the index back up to 2453.57 before resuming the march lower to 2280.52, which proved to be the low of the day. From there the index staged a more robust rally through the afternoon, moving up to 2409.81 just before the close. This one again brought the SPX into overbought territory on the 15 minute chart. The low of 2280.52 is notable also, reaching the bottom trend line of what appears to be a triangle, which I, and several others have noted. That is the point where it staged the afternoon rally. It also brought the index into the zone that would complete a 5 wave sequence for the alternate count I talked about yesterday. So an area watch.

But for now I will still go with my primary count. In yesterday's post I stated that count would require the SPX to complete the final 3 waves before completing. With the action today, it os possible the SPX completed 2 of those waves with the move lower to 2280.52, and the afternoon rally back to 2409.81. With the SPX hitting overbought on the 15 minute chart at the close, 2409.81 may be the end of that wave. If so, and with just one wave to complete, it allows us to give some targets to look for. if my count is correct, and 2409.81 was the completion of a wave, the final wave projects to the 2254-2087 range. Not quite hitting 2030, but within that target range.

So as always a few caveats. One of the useful aspects of my model is giving specific ranges for targets, so it helps to clarify where to look, and gives you a specific point where you know something else is going on. So what to look for today:

If the SPX does not take out today's 2280.52 low, and moves above yesterday's 2553.93 high, it would be highly likely that my alternate cunt was in play, and the index might be in for a move higher.

If the the SPX moves into the 2254-2087 range, and then takes out the 2409.81 high from today, my primary count would be in play, and that would likely complete a 5 wave sequence from 3393.52.

If the SPX falls below 2087, it would mean that today's 2280.52 low was not the end of the 7th wave, but only a part of it. Which means the index would potentially have more downside.

And now, if nobody minds, I'd like to add a few personal words. So those interested only in the analysis can stop there.

First I'd like to thank Lunker for maintaining his blog. It can be a lot of work, and takes a lot of time, and I know I'm not the only one who appreciates the effort.

Secondly I'd like to thank those who have had kind words, and have shown interest in my work. It is more than greatly appreciated.

I started working on what has turned into my 5 Wave Model over 10 years ago. Similar in ways to Elliott Wave, but quite different in many respects also. So when I began developing the model, I started looking at Elliott Wave blogs because they were the closest thing to my work.At some point I stumbled across The Elliott Wave Lives On, by Tony Caldaro. For many  years I found it fun and enjoyable to share my work, and exchange ideas with others. For several reasons, which aren't important here, I decided to stop posting there, and stopped working on my own blog posts. I still followed to blog, mainly because of the respect I came to have for Tony, and his methods. One of the things that struck me about Tony was his commitment to sharing his ideas, and his belief that we owed it to others to pass on knowledge. That it was our responsibility. I was always amazed at his tolerance for people who were unkind in their words to him. Made me respect him more. I, along with many others, was saddened by his passing. But it also made me think about some things, and motivated me to start sharing my ideas again. I in no way want to compare myself, or my ideas to Tony's and his, but rather take some of philosophies to heart.

So my purpose here is simply to share my ideas. If you find value in them, use them, if you think it's a garbage, feel free to disregard them. I have tried to for over a decade, but it works. But it is not the magic bullet. Like every other method, it works wonderfully at times, and fails miserably at others. It is a tool that I hope some can add to their box and find useful.

I do not give financial advice. I do not give trading advice. I am not a trader. I trade, but I'm not a trader. I do not have a multi-million dollar trading account that I can take screen shots of. I am not perfect. My model is not perfect. My interpretations are not perfect. This is not my job. I have a different job. So sometimes my posts will be late at night, sometimes short, sometimes not there. But I will do my best to at least give a short update as much as I can. Some posts will be more detailed than others. As this is my own model, I will try to explain the terminology, and thought process the best I can. Feel free to ask questions if you'd like. I will answer as best I can.

So, again, I am simply here to share my ideas. It is a work in progress, so I will add things as I can. My sincere thanks again for the interest.

Market Update 03/17/2020

Yesterday I talked about the possibility of Monday's 2380.94 low being the end of Wave D, with the likelihood of the SPX following that with a rally into the 2537-2666 zone.

The index did open sightly higher, making it to 2463.54 before reversing course, and falling slightly below Monday's low to 2367.04. The SPX quickly ran up to 2553.93 by midday. The move to a slightly lower low did change the resistance zone to an extent, but not significantly. 2553.93 put the index right within the 2537-2666 resistance zone I spoke of. Once hitting that zone the index pulled back to 2448.00, and then spent the rest of the afternoon trading between those two numbers.

So where does this leave us in my count? From the 3393.52 high, I am counting 2880.89 as Wave 1 of a five wave sequence. The SPX, in my view, has been forming an inverted corrective wave from that point, with 3136.72 being Wave A. Wave B ended at 2478.86, and the rally to 2710.89 as Wave C. Today's low of 2367.04 would be Wave D, and the subsequent rally to 2553.93 Wave E, completing Wave 2.

I realize that most people are not familiar with my terminology, so I will try to simplify it here, hopefully making where we are in my count clearer. The easiest way to think of it, would be to see each wave in my model as breaking down into 9 identifiable waves. There are a number of reasons why I label the waves as I do, with the main one being the relationships between waves. For those familiar with Elliott Wave counts, you can think of it as being a 1-2-1-2-3-4-3-4-5 sequence, which is 9 waves. In my model that would be labeled as 1-A-B-C-D-E(2)-3-4-5, with the A-B-C-D-E portion being what I call inverted corrective waves. So, 1-2-3-4-5-6-7-8-9, equates to 1-2-1-2-3-4-3-4-5 in Elliott Wave, which equates to 1-A-B-C-D-E(2)-3-4-5, in my 5 Wave Model. I count 5 wave sequences in both impulsive and corrective waves, so I won't equate it with Elliott Wave corrective counts. Obviously there are numerous variations for all of these, but that would be the simplest way to look at it. There are also many differences between my 5 Wave Model, and Elliot Wave, so this is only equating count sequences between the two for clarity.

So given that, if Wave E(2) completed today at 2553.93, it means the SPX has completed 6 of the 9 waves, with 7-8-9 to follow. I am currently still expecting this sequence to complete at my 2030 target level. The past few days I have been considering other possibilities, such as the SPX putting in a shorter term low, and undergoing a short term rally before moving down to 2030. That is still possible, but normally if that were to happen, it would occur either as "B" or "D" waves of the inverted corrective wave, or a smaller magnitude sequence would occurred.

Another reason for that conclusion is the relationships that form between waves. The 2030 target was based on the relationship between the 666.79 low, the 3393.52 high, and the intervening waves. The conclusion of this sequence will depend on the relationship between the first, third, and fifth waves of this sequence. But with Wave E(2) possibly completing today, I was able to look at several secondary relationships, and one of them confirms the 2030 number.

But I don't want to get too far ahead of myself. Let's stick to what we know. It does appear that today's low of 2367.04 was Wave D. But Wave E has not been confirmed yet, so a move above the resistance zone I mentioned yesterday would still negate this count.I will adjust the upper bound of that level to 2653 to take into account the new low. I also mentioned yesterday a possible alternate count. That is still a possibility, so if 2553.93 proves to be Wave E, the sequence from 3393.52 could complete under 2400, so a slightly lower low than today and rebound could bring this into play. Especially if we bounce off the bottom trend line, which looks to be around 2300.

Market Update 03/16/2020

Just wanted to spend a few minutes updating my count after today's action. With any luck I'll have more time to go in depth tomorrow.

I mentioned yesterday that Friday's 2710.89 high likely completed Wave C of a corrective sequence, and that a move lower was likely. The SPX did open substantially lower this morning, hitting 2401.57. From there the index moved higher. That rally attempt failed, and the SPX closed near the low of the day of 2380.94.

That low took the index into oversold territory, and continuing my count, that would be Wave D of the corrective wave. If so, the SPX should rally off this low. As I have mentioned the first, third, and fifth wave of each sequence develop a specific relationship. With this being the fifth wave of the sequence, I can project a target for this wave. Assuming my count is correct, this wave should terminate between 2537 and 2666 on the SPX. At the termination of this wave, the SPX should once again move lower. So what I would be looking for is the SPX to move into the 2537-2666 range, and hit an overbought reading on the hourly RSI. A move above 2666 would indicate an alternate count, and the SPX would likely continue to rally.

There is a possible count that would make today's 2380.94 low the completion of a 5 wave sequence lower, and possibly at least a short term bottom.

Another Wave Down?

Last night I reviewed the long term SPX chart, and gave a target of 2030 on the downside. Tonight I'll analyze the shorter term outlook with the Hourly chart. From the 3393.52 high, the SPX formed a 5 wave sequence that terminated at 2880.89. The first wave took the SPX to 3214.65, Wave 2 at 3253.58, and Wave 3 at 3118.77. From there the SPX formed an inverted corrective wave for Wave 4. Normally either wave 2 or wave 4 forms one of these waves. In a normal sequence there is a relationship that develops between the impulsive waves 1, 3, and 5. In an inverted corrective sequence, the relationship is still between the first, third, and fifth waves, but these waves are counter trend waves. So Wave 4 went 3118.77-3182.51-3007.06-3097.07-2855.84-2959.72. One more move down to 2880.89 completed the fifth wave, and the sequence.

The SPX at this point took a bit of a breather, and managed a small rally to 3136.72. At the moment I am counting 2880.89 as Wave 1. This small rally I would count as Wave A of the inverted corrective wave that normally occurs. Wave 2 is the most likely spot for this.

From 3136.72, the SPX started another wave down. First came some very quick waves for 1, 2, and 3. 3136.72-3026.92-3081.65-2976.63. Wave 4 started with a move up to 3130.97, and then the bulk of the damage occurred in waves b, and d of this inverted corrective wave, as is normally the case. One more small move to 2478.86 completed wave 5, and the sequence.

So visually, looking at waves 1, 3, and 5 of both sequences, you will notice the relationship. In the first sequence from 3393.52 to 2880.88 each consecutive wave gets smaller. In the second, from 3136.72 to 2478.86, each consecutive wave increases. There is a mathematical component I use to objectify the relationship, but it visually notable. You will observe the same relationships between waves A, C, and E of the corrective sequences.

Once the market found a short term bottom at 2478.86, the SPX again attempted a rally which took it to 2710.89 on Friday. A couple of things to notice with this wave. First, it took it into overbought territory. Secondly, since we counted the first nominal rally from 2880.89 to 3136.72 as a Wave A, I would expect this wave, as a Wave C, to be similar in magnitude to Wave A. Wave A was just under 256 points, and this rally was just over 232 points. Fairly similar.

Given those two things, it seems likely that the 3136.72 was the end of Wave C, and the SPX should again move down for Wave D. These inverted corrective waves can take on many forms, so I'll be keeping a close eye on the market action from here.

5 Wave Model 03/15/2020

It has been way too long since I have posted. To those who have followed in the past, I apologize. But, considering the state of the market at the moment, I have contemplated starting to post again. Since it has been so long, I will spend a few minutes catching up. Those who have followed in the past know that I have been looking for 5 waves to be completed from the 3/6/2009 low of 666.79. I saw 1219.80, which was reached on 4/30/2010 as the first wave. The following correction to 1010.91 I considered Wave A of a 5 wave corrective wave. The subsequent high on 5/5/20111 of 1370.58 was Wave B of this corrective wave, and the low of 1074.77 Wave C. The market then underwent a lengthy rally that carried the SPX to 2134.71 on 5/22/2015. The market action from 9/22/2014, with the SPX at 2019.26, until 216/2016, when the SPX fell to 1820.66, was a bit muddled. At the time the SPX rose to 2134.71, I was looking for a low below 1810 to complete Wave C of the corrective wave from the 1219.80 high. There a couple of possible counts for this, but at the moment it is moot, since the count remains the same regardless of the exact points. So I will go with 2019.26 completing a 5 wave sequence from the 1074.77 low, and then an extension of that wave to 2116.48 on 11/6/15. Taking that as Wave D of the 5 wave correction from 1219.80, the following low of 1810.10 meets my requirements for the completion of 5 wave from 1219.80.

So we have this entire wave starting at 666.79, Wave I completing at 1219.80, and a 5 wave corrective sequence completing at 1810.10, for Wave II. Considering that, my model would be looking for Waves III. IV, and V to follow. I counted a 5 wave sequence from that 1810.10 low, to 2872.87, thus possibly completing Wave III. I saw a complex corrective wave from there to 2346.58 low reached on 12/31.2018. This completed Wave IV. The SPX then rallied to 2393.52 on 2/25/2020.

So if you take the 5 waves 666.79, 1219.80, 1810.10, 2872.87, 2346.58, 3393.52, who find a correlation of .9925, which meets my model's requirements for the completion of a 5 wave sequence. If so, the target for this corrective wave would be around 2030.

I will continue to post, depending on interest.